Behave Yourself
SMART GUYS CAN DO some really dumb things. Those dumb things include behavior that seems logical, but is often a sign of addiction.
The Merriam-Webster dictionary defines addiction as “a compulsive, chronic, physiological or psychological need for a habit-forming substance, behavior, or activity having harmful physical, psychological, or social effects.” Addictions come in many flavors. Some are benign, some more malignant. Many involve repeating a pattern or behavior in hopes of achieving a different outcome. And yet insanity has been defined as doing the same thing over and over again while expecting a different result—a comment, incidentally, that’s often wrongly attributed to Albert Einstein.
Addictive actions are sometimes characterized as socially acceptable and sometimes not. An example of a socially approved addiction is excessive intake of coffee, while tobacco use would be placed in the malignant category because it can cause cancer.
Let me share with you two of my addictions. The first borders on malignant, while the other represents a socially acceptable activity that might be benign, but can still be financially ruinous.
I’ve had migraines since I was four years old. Starting in my teens, they occurred at least once a month. The treatment was Tylenol with a dash of codeine. When I began college, the dose was doubled, and a pinch of caffeine was added to the “therapy.” The migraines were manageable, or so I thought.
Fast forward to 2008. I was now married with pre-teen twins and working my tail off as an assistant professor. The pressure to produce research was intense. I was also expected to teach, write grant proposals and supervise graduate students. At the same time, every day brought a new stock market low.
I was smart enough to know that time was on my side in saving for retirement. I also knew that market drops were a great buying opportunity. Still, adding work pressure to a tanking market was a guaranteed recipe for more migraines.
Before long, I realized I was self-administering “preventive” meds every morning to stave off migraines. It was a dumb idea. Really dumb. I tried going cold turkey, but the migraines came back with a vengeance. That’s when I realized I was nurturing an addiction to the pain meds. Luckily, exercise and meditation allowed me to turn things around, but it wasn’t easy—and it remains a challenge to this day.
Meanwhile, three years later, I realized I was forming another type of addictive behavior. It was 2013, a time in the market cycle when the proverbial monkey throwing darts looked like a stock-picking genius. I was trudging along with boring monthly additions to my Vanguard Group growth funds. Day trading was all the rage, and I could hear the mythological call of the siren’s song. I thought to myself: I can do this. After all, I’m a pretty smart guy.
I’d previously completed an internship with a truly brilliant scientist whose work was acquired by a mid-sized pharmaceutical company—a company that was now a Wall Street darling. I noticed heavy trading each day during the first 15 minutes after the market opened. Surely, I could time the dips and make a profit.
I opened an E*Trade account using a small bonus from work, and set a modest goal of earning at least $50 a day trading the company’s stock. For a while, it worked. My bonus money almost doubled in no time. Elated, I started using margin debt to leverage my bets. It was heart-pounding excitement as I watched the ticker move.
Actually, it was an addiction—a smart guy doing a dumb thing. It was the first thing I thought of in the morning, and before long I was placing two or three “bets” a day, trading on nickel and dime share price movements. Problem is, these trades detracted from my work responsibilities, taking time away from my research and diverting mental attention away from my students.
Despite all my trading, I was also blind to the clinical trials that the company had underway. When negative results were announced overnight, my early morning bets were trounced. I lost 60% of my cash pile in a single day. Disgusted at my behavior, I sold it all. My one-time bonus was markedly diminished. Even worse, the stock recovered over the next two months and went on to new highs. Had I just shown the same discipline I display in my retirement accounts—setting it and forgetting it—I would have been fine.
I realized that the day trading had turned into a compulsive and addictive thrill-seeking ride. Yes, it was socially acceptable and hence a benign addiction. But plain and simple, it was gambling.
Some lessons can only be learned via experience. In my case, I take comfort that it was a relatively low-stakes lifetime lesson. In hindsight, I realize I could have used that bonus money to take my family on vacation. Or make an extra couple of mortgage payments. Or put it toward retirement.
Addictive behavior can dull even the sharpest tacks in the box. But at least I was smart enough to recognize a dumb activity—and I learned that the daily thrill wasn’t the way for me to achieve financial success.
Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
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