About Dr Joann Lukins

Dr Joann Lukins a psychologist who has specialised in sport and performance psychology for over 25 years. During that time Joann has consulted to individuals, teams, coaches, and organisations across the country. The overlap between sport and organisational psychology has resulted in her services being sought by businesses wishing to apply psychology in an insightful and commercially relevant manner. She is committed to the field of positive psychology, a scientific framework that studies human potential and happiness. The primary focus of her work is to assist clients to find strategies to achieve their goals and reach their potential. Joann’s work helps clients to understand what makes them be healthy, fulfilled and focussed on their personal well-being. In addition to her consulting work, Joann is an Associate Professor (adjunct) at James Cook University and has over 6,000 hours experience in giving lectures and presentations to a variety of audiences.

The Psychology of Investing: What to do about bias

Surely investing is a logical, business exchange where people make sensible decisions based on rational notions and well considered information? Well yes, in a parallel universe called Robot City w…

Source: The Psychology of Investing: What to do about bias


The Psychology of Investing: What to do about bias

Surely investing is a logical, business exchange where people make sensible decisions based on rational notions and well considered information? Well yes, in a parallel universe called Robot City where machines rule the universe and people are few and far between. On earth however, we have people; emotional beings with decisions based on ‘why’ rather than ‘what’ and a reality that is strongly influenced when greed or fear comes into play.

Behavioural finance is the study of human behavior in economic climates, with the early work in the 1970’s by researchers Daniel Kahneman and Amos Tversky, earning them a nobel prize for their work on the psychology of investment behaviour

Our brain is possibly the most amazing and complex ‘machine’ on the planet. At any given time, our brain is thought to consume roughly 20% of our total energy expenditure. To navigate through the complexities of our everyday human experiences, we have ‘rules of thumb’, ‘heuristics’ or ‘shortcuts’ to assist us with our decision making. Whilst normally serving us in making us more efficient, these rules of thumbs generally help us. However, when it comes to investing, if you’re not paying attention you can be vulnerable to bias, and as a consequence poor investing behavior.

pastore con gregge di pecore sui monti Sibillini, ItaliaHerding

Investors feel a strong impulse to do what others are doing.  Therefore, people put more money in the top of the market and sell after crashes at the bottom of the market.

In consultation with your financial advisor, have the courage to do the opposite to the majority.

Loss Aversion

We rate loss twice as heavily as our gains. We would far rather a scenario where we win $75 than an instance where we win $100 and then lose $25.

For people who are retired and invested, we rate loss 5 x as heavily as our wins.

This becomes a problem for when an investor starts to experience losses – investors often go to great lengths to avoid losses that can mean staying in an investment for longer than necessary just to avoid the eventual loss – even though often eventually losing more. market.

Have limits around your investments. Make sensible goals around when you will stay in and when you will get out. Have a trusted adviser assist you to set these goals. An adviser can help to offer you objectivity, particularly if you are emotionally tied to an investment.

status quo

Memories are short and so we lose perspective

The Status Quo Bias

People generally have short memories for events. For example, if a stock goes down people tend to behave as if they will continue to decline.

Keep sight of the bigger picture.  Research how the shares have travelled over a much longer time frame.

Financial advisors often say that investors take too narrow a view of the market and don’t commit to the longer term strategy that is needed.

Illusion of Control Bias

In committing to a financial investment, investors will gain greater confidence in their decision and believe with more certainty in their decision than may be warranted. The belief that an investor has more control than they do may result in failing to sell a stock, when such a decision is warranted. The best example can be seen on the craps table at a casino, If people want high numbers, they’ll roll the dice really hard, but when they want lower numbers, they roll them very gently!

Look in the mirror! Acknowledge that you are human and that when you open yourself to the possibility that you may be vulnerable to thinking as others do, you may be more likely to avoid biases rather than experience them!

Male hand rolling five dice on green felt

The illusion of control: rolling soft for low numbers and hard for high!

Our greatest bias?

Interestingly one of the most problematic biases we can suffer is when we assume that a bias is experienced by others – but not ourselves.

Look in the mirror! Acknowledge that you are human and that when you open yourself to the possibility that you may be vulnerable to thinking as others do, you may be more likely to avoid biases rather than experience them!


So what can you do to invest without falling into the trap of one or more of the investment biases?  To find out how to invest with the approach of a professional athlete, click here.

Emotional intelligence – the cost of getting it wrong.

I stood in the line at the grocery store register with afternoon tea for the children and two bunches of flowers in my arms. The fellow in front of me had placed his cans of tuna and bread in front of me as we waited for the person in front to be served. He struck up a conversation about the flowers I was buying asking who they were for and why I was giving them. In the midst of this conversation we hadn’t noticed that the person in front was finished and our groceries had merged together on the conveyor belt.

5691243597_ebca2371f3_z“These all yours?” snapped the checkout operator, pointing to everything on the conveyor belt to my new found friend. “No” he answered. She pointed to the dividers adjacent to the belt, “Well what do you think those are for then?” she continued in a less than friendly tone. By this stage the discussion had gained the attention of the others in the line. “It’s not that hard” she continued, “All you have to do is put them down between your groceries”. The interchange between the two of them continued with both getting more hostile, finishing with an argument over whether or not he had the store loyalty card. By the time they had finished he had stormed off and she was clearly furious.

As a psychologist I know as well as anyone that we can never pre-suppose how someone is feeling. A multitude of circumstances and reasons may have led to that staff member feeling and acting the way she did. However, with all that aside when we are at work, no matter what our role, we are engaged in a ‘performance’. Our game face needs to be on and there are times that no matter what our internal dialogue we simply need to do what is required. I’m sure her anger wasn’t anything to do with the use of the dividers, however that is where it was played out on that day. Her intention was to remind us of the helpfulness for her and us of using the dividers. Communicating that in a less hostile way would have greatly increased the likelihood of a positive exchange and achieving her desired aim. Certainly the other customer storming out of the shop was not the best outcome.

Emotional intelligence is the radar we all have to read and understand emotions, and our ability to self-regulate when we use them. Having a well developed emotional intelligence is crucial to the success of our interactions with others. The likelihood that someone will trust and engage with us is built upon interpersonal connections formed on the foundation of emotional intelligence. A starting point for us in enhancing our emotional intelligence is to be self-aware of our emotional state. Are you feeling frustrated? angry? excited? happy? Knowing our emotional tone helps us to moderate how we behave and how we interact with others. If a telephone call with a Telco has left me feeling frustrated (can you guess I’m organising NBN at the moment?!) and I check in with my emotions as I finish the call, it increases the likelihood that I won’t take that frustration out on the children when I then walk into the lounge room. Acknowledging the emotion is the starting point to managing the frustration. The emotion you don’t see controls you.2016mixflowers

So perhaps if the check out operator had used self-awareness to acknowledge the emotion she was feeling as we passed through the register she could have (inwardly or outwardly) taken a breath, smiled and mentioned using the dividers in a way that would have got her what she wanted. Upon reflection, maybe I could have given her one of the bunches of flowers I had bought!

Exercise and Depression: Recommendations from the research

Directly affecting approximately 10% of the population during their lifetime, major depressive disorder (MDD) causes a significant impact on the individuals affected and their families.  Just over half of the people who live with MDD seek assistance, and of those a smaller number receive evidence-based treatment options.5002869_orig

Treatment options for MDD vary, including:

  • anti-depressants
  • psychotherapy
  • neurostimulation (electroconvulsive therapy), andMHT036_man-biking-exercise-depression_FS
  • repetitive transcranial magnetic stimulation

Despite the evidence that these treatment options do work, their suitability for any given individual should be carefully considered due to possible side-effects, cost and accessibility.  In addition to these options, alternative economical treatments should be considered.

Exercise and physical activity as an alternative treatment option for MDD has delivered positive outcomes.  The American Psychiatric Association has taken to including exercise as a option in it’s most recent guidelines for treatment.

So what do we know about the relationship between exercise and MDD?1234

Both aerobic exercise and resistance training can be beneficial.
Aerobic exercise is essentially exercise that causes shortness of breath.  Running, swimming, cycling and walking are all examples of aerobic exercise that has been shown to be beneficial in reducing symptoms for people with MDD.
Resistance training involves such exercise as lifting weights, walking with hand weights, and other exercise that requires you to ‘work against gravity’ (hence the name resistance).  Less research has been conducted with resistance training exercise, however the results suggesting its benefits in reducing the symptoms of depression are optimistic.

How often?  Ideally exercise 3 times per week for 45-60 minutes each time.
Recommendations for how often to exercise and duration can vary considerably.  The reasons for the variation can be dependent upon the desired outcome of the exercise (for example improving diabetic control, increasing fitness levels, weight-loss).  In the instance of reducing symptoms of depression, studies have compared 2-5 sessions per week at 30-60 minutes per session.  The guidelines for optimally assisting with depression are to participate for 3 sessions per week for a duration of 45-60 minutes each time.

How hard?  What should be the exercise intensity?
How ‘hard’ to exert yourself when exercising is an important consideration when planning an exercise routine.  The guidelines for aerobic exercises (walking, swimming, running etc) are based upon your heart rate.  Keeping your heart rate elevated within the range of 50-85% of its maximum capabilities.  exercise-beats-depression
In a laboratory this is tested by conducting a VO2 max test.  A VO2 max test requires a period of time spent on a treadmill or rowing machine with various breathing apparatus attached.  Most of us don”t have the opportunity to complete this rather unpleasant task, so as a rough guideline if you subtract your age (in years) from 220, aim to work at 50-85% of this number.
So, a 50 year old person should approximate their maximum heart rate at 170 bpm (beats per minute) and to benefit from the anti-depressant effects of aerobic exercise, be exercising somewhere between 85-145 beats per minute.  This is most easily kept track of with a heart rate monitor.  However if you want to quickly (and cheaply) gauge your heart rate, simply hold two fingers to your neck or your wrist until you can feel your pulse.  Count the number of beats over a 6 second period and add a 0, this will give you an approximation of your heart rate for 60 seconds.

The guidelines for resistance training is to repeat an exercise 8 times, briefly rest and then repeat two more times (resulting in 24 repetitions of the exercise).  The weight of the resistance should be 80% of the heaviest weight you can complete by yourself.  So, for example if the heaviest single bicep curl you can complete (with good form)  is 10kg, then the weight you lift for your 3 sets of 8 repetitions is approximately 8kg.

For how long?  Keep exercising for at least 10 weeks.
Some studies have shown significant improvement in depression symptoms in as short as 4 weeks.  Most studies are supportive of a continuation of the exercise program for at least 10 weeks.  When focusing from a lifestyle perspective, the recommendation would be to make exercise a life-long pursuit. However, from the perspective of reducing depressive symptoms at least 10 weeks is the recommendation.

Can I make it easier to achieve?  Using psychology to maintain exercising.
Maintaining an exercise regime is not always easy.  Maintaining an exercise regime when you are experiencing depression can be even less so.  Understanding some of the factors that help to maintain exercise can help to make the change easier.

Experience tells me that people find it challenging when life feels out of control or unpredictable, it is harder to cope.  Engaging in an exercise regime is best assisted when the opportunity of choice is offered.  Choosing the type of exercise, the location, and frequency will increase the perceived level of control over the activity and consequently increase involvement and adherence.

Choosing and maintaining an exercise regime can often be challenging initially.  For some people, seeking the support of a health professional (such as exercise physiologist or psychologist) may help to overcome some of the barriers to change.

Much of the information included in this blog is based on the meta analysis written by Rethorst and Trivodi on the prescription of exercise for people with a major depressive disorder.   A meta-analysis is a research paper that summarises key findings of a multitude of research papers on a particular topic.

Information provided in this piece are general in nature.  People experiencing depression should seek advice from their treating professionals to determine the appropriate course of action for themselves.  People who have not exercised recently should seek approval by their medical practitioner to commence an exercise program.  An exercise physiologist is an appropriately qualified health professional to assist you in planning an exercise program.