Does Movement on the Stock Market Make Us Anxious?

Photograph by Zahra Amiruddin for 1 Finance Magazine

There’s a scene in The Wolf of Wall Street where Matthew McConaughey’s character gives Leonardo DiCaprio’s character some unconventional advice on how to stay calm — an imperative need to counter the stress of stock-broking life. Pop-culture portrayals of investment bankers, stockbrokers and other financial suits have made it a universally acknowledged truth that there are certain traits — of bullishness, arrogance, hardiness — that come with the territory. But why is that the case, what does that mean for their mental health, and how can we, as individual investors dipping our toes into the market, learn from this?

Stock markets fluctuate on a daily basis — skyrocketing and then plummeting, sometimes without any warning. It’s a space of massive risk and unpredictable outcomes, and a turbulent market can be an unnerving space, especially for those tracking these shifts to buy and sell on a daily basis. Researchers studying the stock market in China between 2014 and 2015 found that “exposure to stock (defined as the condition of being exposed to both stock and stock-related information) can induce anxiety disorder when the market is in a turbulent period.”

Even for those not in the business of stocks, being invested in these markets can have a detrimental impact on mental health if things aren’t going in their favour. In fact, when the global stock market crashed in 2008, the ensuing recession not only resulted in sudden, large wealth losses, also in an increase in depressive symptoms and the use of antidepressants among older adults in the US, as noted by Melissa McInerney, a Professor of Economics at Tufts University in Massachusetts.

Fluctuations in the market are, of course, unavoidable. Besides the day-to-day rise and fall in prices, they tend to be affected by several factors, like policy changes (remember demonetisation?) and pandemics (like the 2020 stock market crash). But while there are unforeseen factors at play, there are also ways to predict market performance. For instance, the India VIX, a volatility index based on the NIFTY Index Option prices, measures the market’s expectation of volatility over the near term. The Market Mood Index — which tracks the “sentiment on the street” — is a tool that takes into account several factors (including the India VIX) to gauge if it’s a good time to sell or to hold on to your stock.

While risk is an underlying factor across market-linked investments, gauging how much risk you — as an individual investor — are comfortable with, and taking adequate measures to ensure that you aren’t out of your depth, is a good way to keep a growing anxiety under check. And as seasoned investors and financial experts will tell you, volatility is par for the course on a daily basis, so it’s best not to keep too close an eye on your market investments. To quote Matthew McConaughey’s character from The Wolf of Wall Street, “nobody knows if a stock is going to go up, down, sideways or in f***ing circles.”