Vulcan. Iceberg. Cold Stone. These are nicknames that friends (or perhaps enemies!) have called me over the years. I’d like to think it's due to the fact that at one point I ate a lot of ice cream or that I watched a bunch of Star Trek in the 1980s (I actually never owned a TV during my adult life until a couple years ago when my first child was born). But in reality I know better--it is my uncanny ability to "turn off" emotions and analyze circumstances solely with the left side of my brain. While this is a trait I can take no credit for (I probably have my dad to thank), and without question my proverbial pointy ears have invariably driven friends and family crazy over the years, it is a characteristic that has served me well in my two decades-plus investing career.

Money in general and investing in particular have an enormous emotional component. The mantra that greed and fear drive investing behaviors is dead on. Statistic after statistic demonstrates that the typical retail investor unloads stocks after major drops when they can no longer ‘take it anymore,’ only to re-establish positions once the market is showing clarity (which of course is just code for the market having gone back up again). This leads to consistent material under-performance by the average mutual fund investor who regularly gets whipsawed in zigging when the market is zagging. I regularly hearpeople in the community who say when the market is bleeding redthey can’t even stand to open up their brokerage account statements. The reality is that to manage a business or portfolio properly, being informed of bad news is more important than being made aware of good news. Yet the way most investors brains are wired, emotions take over and people physically cannot get themselves to unseal an envelope containing what amounts to a notice of stocks on sale (yes, what a concept that stock price declines can actually be a good thing in the near term).

Which brings me to the main point: Know thyself well. If feelings get the better of you, if you smell fear on your own breath upon rapid market declines, then create a structure that will compensate for these natural emotional tendencies. I have seen countless occasions when investors put a tremendous amount of time and effort into researching and managing stock picks, only to throw all this exertion away in selling at panic lows (think March 2009). This would be akin to working out and dieting for a year in preparation for some big event – like a wedding – only to gorge yourself on doughnuts the week before and make all your effort for naught.

That's why one of the biggest roles an investment advisor can play is not just picking great stocks and appropriately allocating assets, but instilling – whether appreciated or not – an investing discipline that is in your long-term interest. A worthy professional money manager is like the boat captain who lashes you to the mast when the Siren songs are beckoning to buy or sell stocks at just the wrong moment. I have learned in life that when I tried to take on a complex subject myself — be it a tax situation or legal issue – with the goal of saving a few bucks by not hiring a professional, the result is my having been penny wise and pound foolish. Just because something is easy to get into (e.g. opening up a brokerage account) does not mean that it is simple to execute effectively. When markets are climbing, virtually all investors, even the dart throwing monkey, can make money. But skilled, professional investors who are able to set emotions aside earn their keep during the 100 year floods that seem to show up in the stock market every 12 to 18 months and cause a rash of panic. And, of course, these market debacles happen quickly and when you least expect them (despite TV financial commentators stating with confidence after the fact that it was so obvious the market was due for a correction). Thus, the typical investor is taking actions based not on a well thought out and pre-determined plan, but on whatever the right side of their brain – or financial media host paid to instill fear and sell ads – is screaming to them at the time.

Turning a blind eye on your investments is a recipe for financial disaster. If you were not born with ice water running through your veins, find someone whom you trust and who invests with discipline and based on facts - and let them serve as your savior during market turmoil. If you feel you must take action, just like the bite of a few chips rather than the whole bag might satiate your appetite, consider taking small doses of stock market action to fulfill your emotional need to do something (e.g. sell a few shares of some inferior holding). This technique will often save you boat loads of money in the long run when markets become rational again and your long-term plan gets back on track.