“Face Your Fears!” is a common expression, but one that is misplaced (and misleading) when it comes to investing. It seems an obvious conclusion that eventually we have to face the fears that trouble us most about investing: “losing it all” in a bear market, the nauseating volatility and the endless barrage of threatening headlines. These are real concerns, which face every investor.
I agree that at some point we must face our fears. Usually, more than once. But I disagree that facing investing fears solves the issue. Sometimes facing fears serves less as an antidote, and more like an amplifier of the fear. Instead, I believe that the smartest investors have moved beyond simply facing fears, to actually embracing them.
Before that, let’s just spell out some of the most recent news terrorizing most people (and certainly most investors):1
The AI Boom Is Looking Like a Massive Debt Problem
The Bond Market Had Its Worst Month In Years (see here for my views on bonds)
Diesel Prices Are Out of Control, Oil Surges Past $100…Again
Inflation Remains Stubbornly Above the Target—Will The Fed Need to Respond?
France’s Debt Crisis Could Be a Ticking Time Bomb in Europe
If you didn’t feel the fear before you started reading, you probably do now. How is anyone expected to embrace this litany of fear?
Fear Is More Than Emotion
Here’s what I mean by “Embrace Fear”:
Acknowledging the reality of fear as an emotion, while accepting fear as a valid indicator.
Too often investors acknowledge fear as an emotion, and then stop there, as if fear is only emotion. (I have a theory why that is, but no space for it in this short article.) Fear is not only emotion….it’s an indicator which needs to be accepted as such. Furthermore, it needs to be taken hold off—embraced—much like bearhug.
We are “wired” to experience fear and to react to it. Some fears are healthy, while others are not. But we are also designed to respond to reason. In fact, healthy fear should lead to reasoning, and not to reaction, as its first port of call.
However, fear is attached to unconscious/subconscious beliefs about those things feared. For example, an expressed fear I’ve heard endless times is “I’m not investing because I don’t want to lose all of my money!” No doubt! Who does? But that fear is attached to something in our way of thinking, or more likely to an event(s) that still influences our thoughts about investing.
More often than not, our fears are related to personal experience or someone we know (or read about) who bet big and lost it all—a transformative experience which generates a severe emotional reaction. This leads investors to erect barriers against that potential threat (e.g., not investing).
Fear As An Indicator
If fear is only emotion, what good is it? Think about it. If fear is only emotion, then it’s an enemy—a worse sort of threat. And while I don’t intend to clash with social-evolutionary theory, if our only reaction to threats is “fight or flight”, then evolution hasn’t really set us up for survival, much less success.
Fear is an indicator because it points to something outside of ourselves. In addition, fear acts is an indicator precisely because it elicits our attention, much like a flashing indicator light from a car is indicating its intention to turn. In effect, indicators are nothing more than, “Hey, someone is telling me something might happen.”
The issue for the investor is this: will I succumb to the emotion of fear (allowing it to influence every thought and action)? Or, will I see through/beyond the emotion to the substance of the threat—to see what it is indicating?
The scary headlines listed above are “real” threats. Real in the sense that they have been published and we can be influenced by them. Threats in the sense that they suggest bad things may happen. News publishers are suggesting I should be worried about AI debt, horrible bond markets, oil, inflation (and the Fed), as well as the spread of French problems throughout the rest of Europe. Yikes!
OK, so which way are the “fear indicators” pointing?
Rational Acts of Kindness
Accepting fear as an indicator requires that I first acknowledge fear as an emotion. This is crucial because my acknowledgement of fear as emotion (although not emotion alone) is a rational act. If need be, say it out loud: “I am afraid of…[INSERT SCARY HEADLINE]. Rational actions are the only way to move past the emotion of fear to accepting fear as an indicator.
I spent decades employing rational acts (of kindness) with high net worth clients around the world. I am sure that I annoyed many clients, but I truly did this only as an act of kindness—convinced that to move past emotional states of mind is to help clients move to a rational state. This transformation occurred by addressing market fears with simple, open-ended questions, such as:
In what way is this fear informing your investment decisions?
It is an incredible thing to watch (or listen to) scared investors gradually transition from an emotional mindset to a rational one. It rarely happens by trying to convince someone to “face their fears” or by talking them down off of a ledge. But almost always by asking questions—ones that prompt a genuinely rational response.
A rational state of mind leads to unique clarity. Suddenly fear as emotion is now fear as an indicator. And those fears always point to something—either good or bad.
From Indicators to Pointers
As an investor, I need to be in a rational state of mind in order to see threats as indicators. Indicators are all around us, once we see clearly. And, once there (through a series of questions that tamp down emotions and reactions), it’s time to practice applied knowledge.
Indicators point in one direction or another. Pointers are fantastic! If a headline is trying to scare me, then I have an advantage that I can use to my benefit. Let’s use one of our scary headlines as an example:
The AI boom could come to an end…if, frontier AI companies, who have made wild bets on infrastructure, suddenly begin struggling should financing costs remain too high.
Hmm. What is driving this story? Certainly rising bond yields to start. However, as I read more articles repeating the same AI threat, I see a thread—the IMF’s 2026 October Financial Stability Report, in which it flags both weaker AI investment or profitability as a potential trigger for asset-price correction. This report is not a forecast, but a warning shot. I also know the IMF’s record of making market calls, almost always wrong.
With that in mind, I remind myself that bull markets climb a wall of worry. So, scary headlines are actually bullish for stocks, when economic and market fundamentals (e.g., profitability, ROI, etc.) remain strong.
“But wait! What about Anthropic’s debt? And news that revenue is decelerating?” (See the footnote for a response).2
This AI-doom story is an indicator, not that all is well, but that the pullback on AI stocks over the past few days is probably overdone. It points to an AI rebound simply because it is based on a compilation of threats that already exist (we know about bond yields and we know about AI spending)—in other words, these sort of threats lose their power to surprise.
The pointer? This is a non-story. It’s actually (and ironically) bullish for stocks. And, where cash is available, I may buy dips in AI related shares.
Embracing fear is less about getting gooey positive vibes about scary news. On the contrary, it is a practice of seeing emotions for what they are and countering them with rationality. Turning scary headlines into indicators that point towards action. And it is actionable. Give it a try!
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This list was curated with the aid of an AI chatbot.
News of Anthropic’s slowing revenues added fuel to the “AI Boom Is Almost Over!” narrative. Anthropic’s revenue was actually the highest in its history, but the pace slowed. This could be due to drops in price-per-unit. But the missing elements: Anthropic reports operating profitability (which few talked about); and, its debt financing arrangement with Broadcom is just that, a facility which hasn’t been used yet. so, hardly a ticking debt-bomb!