“It ain't the heat, it's the humility.” - Yogi Berra
I was recently watching national news, specifically the weather. The meteorologist was carrying on about a heat wave sweeping across the south and up the east coast. Several spots were highlighted on the map with two numbers. The first was the high for the day and the second was the heat index. The actual temperature followed by a number that indicates how hot it feels. The numbers over Charlotte were 92/105. It was expected to be 92 degrees, but it would feel like 105.
Why? It seems like the temperature would just be the temperature.
The hint is in the annoying statement from those living or visiting the southwestern United States, “it’s 98, but it is a dry heat.” It is about the moisture [or lack of] in the air – humidity.
I had to refresh my knowledge on the topic… Our bodies regulate temperature by opening pores on our skin to release water and salts. As the water evaporates, it transfers heat from our body into the air. This process usually carries away enough heat to cool us off.
But the rate at which water — or in this case, sweat — evaporates depends on how much water is already in the air. On humid days, when the air is already saturated with water, sweat evaporates more slowly. On dry days, sweat evaporates quickly, which means it also carries away heat faster.[1]
It is interesting that our body does not actually produce more sweat when it is hot and humid. The water just does not evaporate off our skin into the air. This is exactly why it can be 92 and feel like 105.
When relative humidity reaches a high enough level, our body’s cooling system simply can’t work. Sweat evaporates very slowly, if at all, and the body heats up. In extreme cases, we can suffer from heat cramps or heat stroke.
Our individual circumstances, environment, and wellbeing have a tremendous effect on our overall condition ˗ how much heat we can handle.
We are emotional creatures ˗ it is an inescapable part of our decision process. This is mostly a good thing, and it is part of what makes us human.
If our job or business is doing well, if we are having fun and feeling good personally, if we are on and sticking to a budget, then we are typically able to weather the volatility [heat] of the market much easier. On the other hand, if we are personally or financially stressed, we look to connect everything around us to the problem.
I have observed this in myself, friends, and clients over the years, manifesting itself around risk. Either wanting to be invested more aggressively to “catch up” or fill an immediate need, or a desire for no risk - “get me out!”
Put simply, external factors and our emotions can drive us to dramatically deviate from our long-term plans. This often fuels a desire to take on too much risk or eliminate it.
When it comes to investor success, this human condition is more problematic for clients than any other. Emotional investing is a serious and difficult thing to overcome, so serious it warranted a Congressional study. The Library of Congress investigated and compiled various research on the topic entitled “Behavioral Patterns and Pitfalls of U.S. Investors.[2]”
This may be one of the few times we agree with a Congress. The conclusion of the report states the importance of focusing on long-term goals as “….an essential means of preventing investors from committing a predictable series of mistakes.”
That said, if you are sweating something significant, let’s discuss and determine if your long-term plans and investment process should be adjusted.
Stay cool and let me know if you would like to discuss sweat, life events, or anything else on your mind.
My Best,
Ryan
[1] Heat & Humidity. Sourced from - https://spectrumlocalnews.com/nc/triad/news/2016/07/7/why-does-it-feel-hotter-when-it-s-humid---science-#:~:text=Our%20body%20produces%20sweat%20to,It%20feels%20hotter%20to%20you.
[2] Behavioral Patterns and Pitfalls of U.S. Investors. Sourced from - https://www.loc.gov/rr/frd/pdf-files/SEC_Investor-Behavior.pdf