What, Me Worry?

Here are three facts:
1. The German economy is growing at its fastest rate since 2000.
2. German investor confidence is at its lowest level in more than 13 years, according to the ZEW survey.
3. The German DAX stock index is up over 19% this year (in USD).

These days, gloom pervades investor sentiment around the globe despite a markedly upbeat economy. Never mind we're in the 4th year of a worldwide bull market for stocks. Never mind corporate earnings continue to exceed expectations, or that interest rates are still near historical lows, or personal income and household net worth are surging, or inflation is well contained.

How could things be going so well, yet most people feel so bad? It's not just German investors who are worrywarts. It's everyone. Anxiety is as natural an emotion as joy for humans. Worry and fear are mechanisms of good survival instinct. Our Stone Age brains needed to fret to keep us alive from predators in the wild. But those same instincts can hinder us today—they burden our brains with noise and irrationality when clear, logical thought is needed.

Figuring out how your brain could be fooling you into making mistakes is vital for investment success. Fear and worry are two of the biggest pitfalls. Is the global economy really not doing well, or do you feel like it's not doing well? Knowing the difference makes you a better investor.