Emotionally Invested

By Martha M. Hamilton
Sunday, January 21, 2007

It's ridiculous, I know, but I felt nervous when I picked up the phone to sell Washington Post stock.

It's funny how emotions can get the best of you when it comes to a decision that should be so cut-and-dried.

If there's one thing various financial planners have agreed upon when they looked at my portfolio, it's that I shouldn't be as heavily invested in a single stock -- about 16 percent of my total holdings are in Post shares.

That doesn't seem like so much to me, but I have to assume the professionals have a point. Even so, I couldn't bring myself to get rid of it all. I agreed to a more modest plan to reduce it by half.

After all, I believe in The Washington Post. Even given the unsettled future facing the newspaper industry, I know we have a good product, and I believe there will always be an audience for it. Okay, maybe a smaller audience.

So shouldn't I keep my money where my heart is?

Intellectually, I know the answer is no. But I also know I'm not uniquely stupid for bringing visceral feelings to an investment. Many of us remain emotionally invested in a stock or a mutual fund -- even when we shouldn't.

"As humans, we create stories. We create meaning where it's not," said Richard L. Peterson, managing partner of Market Psychology Consulting. "Most of the time when we own something, we create a meaning or value for it that's much greater than what other people would see." That's why we keep old clothes around even when they're not wearable or other odds and ends that remind us of moments in our past.

And The Post reminds me of most of my adult life. It's where I came to work when I was 26, where I and others fought for a better workplace, where I was pregnant with my daughter and where I reported and wrote stories and covered beats that I loved. It's where I developed a deep sense of friendship and solidarity with colleagues and where I had enormous professional satisfaction working on a product of which I was enormously proud. Heck, it's even the place where I met a friend who's now walking around with one of my kidneys. How do you put a price tag on that?

Well, the logical answer is that you don't. Those are memories, not Post stock. So when those emotions slop over into my decision to keep or sell the stock, it's what Peterson calls mis-attribution. "It really has something to do with your feelings about the company and your friends and colleagues," said Peterson, whose book "Inside the Investor's Brain" is due out in July. "You attribute the feelings and thoughts from one area to a neutral area."

And sometimes that makes you feel guilty if you even think about selling, as if your investments somehow would know. It has to be said: Our investments don't love us and won't experience a feeling of betrayal.

I mentioned my difficulties to a friend who said she went through the same quandary with stock she inherited from her great-grandmother. Her attachment to the stock was so deep she resisted advice even from her husband to sell it. "I really didn't think of it as money or anything," she said. "It was something she had and wanted me to have."

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