Four rules of anxiety: how to stop fearing the AI apocalypse and not expect the worst

In one week, a new AI tool from Anthropic to automate clerks' work, led to a big sell-off on Wall Street in several industries at once. Investors fear that the new AI capabilities could jeopardize traditional business models. Analysts from New Street Research believe that the fall in markets is due not so much to objective factors as to anxiety. In psychology, particularly cognitive-behavioral psychology, experts describe four rules by which an anxious person lives. In investments, they turn us from analysts into indecisive people or even panickers. Psychologist Mikhail Tegin explains how these mechanisms work on the stock market and how to turn them to your advantage.

Robert Leahy, one of the leading experts in CBT, in his book Freedom from Anxiety, speaks not so much of the anxious person as of the "anxious brain." In brief, it's a condition where he or she constantly confuses possibility with probability. In other words, according to the version of the anxious brain, it is quite possible to meet a dinosaur in the street - with obviously unpleasant consequences for the person. Is it possible to meet a dinosaur in the street - the chances are 50/50, either yes or no. What is the exact probability of that happening? That's the question the anxious brain doesn't get to. For him, any "bad" scenario is an inevitability. Because of this, the investor spends his energy fighting a future that has not yet arrived. And it never will, which is even more important. Here are four rules that the anxious brain works by?

For the anxious brain, information is a weapon. He believes that if he reads all the news about the conflict between Europe and the United States, it will keep him from being taken by surprise.

In fact, constantly scanning the news only fuels your brain's urge to learn and comprehend even more, and you begin to look for and even see disaster in every market "sneeze."

Solution: Start planning instead of worrying. If you see a threat to your investment, write down a clear scenario of what you will do. The important thing is not a script for market developments or investor behavior, but exactly what you will do. Say, "If the stock falls to X, I will do Y." Once the plan is ready, the constant scanning of the information space for dangers can lose its meaning.

For the anxious brain, information about a 2% market drawdown is transformed into the beginning of a big crisis, after which there is one scenario - "I will live in a cardboard box on the street". Psychologists call this catastrophizing: we take one negative event and from just a negative one we build a logical chain from it to a complete collapse.

We feel cornered, because collapse is inevitable. This is well illustrated in the movie "The Limit of Risk" - when the realization of the scale of the disaster paralyzes people and their ability to make decisions. That is, an investor does nothing with his portfolio even when the situation calls for it.

Solution: reality check. Here we come to the confusion of possibility and probability: possibility is about what we can imagine in our head, fantasize. Probability is to calculate what of what we have fantasized can be in reality. That is, possibility answers a question in a "yes or no" format, whereas probability answers a question in a "this will happen with a probability of N%" format, or what is the statistical probability that company X will go bankrupt tomorrow? What's the worst that can actually happen? Usually it is "I will lose 5% of my deposit" or at most "I will lose all my money", but not "I will starve to death".

This rule leads us to believe that if we look at a chart long enough or often enough, the price of an asset will turn around and go up. We try to "negotiate" with the market, and there is an element of "magical thinking" in this - as if the market is animated or can simply respond to our requests.

In fact, it is a desperate attempt to eliminate uncertainty, although the market is uncertainty incarnate. Trying to control it is like trying to make it rain by dancing with tambourines (also a manifestation of magical thinking).

Solution: accept uncertainty as part of the game. The exercise "Time to worry" can be useful for this. To stop worrying all the time, you need to start doing it on a schedule. So give yourself 5, 10, or 15 minutes a day - whoever is more comfortable at some fixed hour, like 6:00 p.m., to "legally" get nervous about the market. But don't do it before going to bed, so as not to increase the level of stress hormones, so you risk not sleeping. The rest of the time - go about your daily work and business.

What is the right way to get nervous during this exercise: make a note in your phone or write it down in a notebook. Write down all anxious thoughts as soon as they arise. When your chosen "alarm hour" comes, start worrying intensely. After the allotted time has passed, return to your normal activities.

This is perhaps the most dangerous rule because it can be difficult for us, even physically, not to worry. If we are anxious about leaving a falling asset in our portfolio, our brain demands: "Sell it immediately and you'll feel better." We sell on the decline, lock in the loss, and do feel relieved. The anxiety goes away because the uncertainty is gone. But the money, or part of it, can disappear along with it.

Anxiety here - and in general always - is felt as subjective discomfort, and when it reaches a certain level, it becomes impossible for us to tolerate it. Because of this, the above situation arises when you sell in a declining market - this is called "negative reinforcement", where you get hooked on short-term relief at the cost of long-term well-being.

The solution: learn to tolerate discomfort, or, as psychologists say, develop a tolerance to frustration. This means not taking impulsive action. If your strategy says "hold on" and your anxiety is screaming "save whoever you can," just take a deep breath first. The most important task at this point is to sit out the impulse. It inherently cannot last indefinitely, and with it the feeling of discomfort. Exact estimates of how long this state can last depend on the individual characteristics of the person: type of temperament, the prevailing way of processing information and others. In my experience of working with clients, it can be a couple of tens of seconds to several minutes or hours. The most acute period usually passes in 10 seconds to one minute.

Modern psychology agrees that an alarm is an alarm system built into us. It is specifically an audible alert, not an instruction to act, a prompt, or something dangerous. It's useful when it's productive, such as when an investor thinks, "I have too much exposure to one sector, it's risky. I need to rebalance." Any extremes or all-or-nothing principle tells us that anxiety is unproductive, unhelpful.

Thus, investing is not about the absence of fear or anxiety, but the ability to act in spite of it. The Four Rules of Anxiety are features of our biological firmware that we can benefit from like the features of our bodies, for example. So sometimes you just need to allow yourself to be a little afraid without hitting the sell button.

This article was AI-translated and verified by a human editor