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How Positive Thinking Can Make You a Better Investor

The average human brain contains over 100 billion neurons and generates about 70,000 thoughts per day. Now, imagine if instead of rehashing last night’s episode of Ozark, a friend’s Instagram post of fire-roasted eggplant or what you should have said three years ago when that co-worker rudely interrupted you in a meeting, you used your awesome cognitive powers to become a better investor? Research shows that positive thinking could be the key.

Positive thinking means looking on the bright side and experiencing emotions like hope, joy, optimism and well-being. There’s a strong connection between our thoughts and our physical, mental and emotional health. Positive thinkers have a stronger immune system, which makes them less susceptible to all kinds of diseases — from the common cold to cardiovascular disease, researchers have found. In fact, a sunnier outlook can bring success across multiple life domains, including work and earnings.

Research has found positive types are more likely to obtain better jobs, experience more job satisfaction and be higher performers, and they are less likely to suffer from burnout.When positive thinkers encounter stressful situations, they adopt efficient coping strategies; they’re also less likely to give up than pessimists. An upbeat outlook may help us make better life decisions and to plan for the long term.

Sounds like a recipe for investing success, doesn’t it? Here are four proven ways to look on the sunny side.

Fake It (‘Til You Make It)

Turn that frown upside down, say researchers at the University of Kansas. They concluded that even fake smiling lowers our stress response. Smilers, especially those who generated “genuine” smiles that involved the mouth and the eyes, had lower heart rates and stress levels than non-smilers after doing stressful activities. Since stress can interfere with our decision-making, managing it could enhance our cognitive abilities.

The Investor Whisperer

Want to raise your game? Try a little tenderness. A study from Imperial College London showed that when coaches gave positive reinforcement to their rugby players while showing them replays of their successful moves, it raised players’ testosterone levels more than either criticizing them or letting them self-motivate. Those who received positive reinforcement also had the best performance. Investors who pile on the pressure may actually be creating an obstacle to making good investment decisions. Celebrate your achievements.

An Attitude of Gratitude

One study at the University of California, Davis, asked participants to write a few sentences each week. Those who were instructed to write about things they were grateful for exercised more, visited doctors less often, reported greater personal satisfaction and made more progress toward their goals — whether academic, interpersonal or health-based. Instead of feeling anxious or angry toward the markets, invest your mental energy into appreciating the wealth they can create for you, or think about all the other ways that you achieve financial well-being and how that enhances your life.

Garbage Collection

Researchers at Ohio State University concluded that how we “tag” our thoughts — as worth keeping or not — changes how we apply them in our lives. When students wrote either positive or negative statements about their bodies and then threw those notes away, they stopped thinking about them. As investors, when we catch ourselves ruminating over past mistakes or missed opportunities, simply writing down these thoughts and then throwing the paper away could leave space in our heads for other, more productive ideas.

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