Editor's note: We're facing a worldwide epidemic...

It isn't obesity or opioids... And it doesn't have anything to do with any of the fears of infectious diseases – like the Zika virus – that have been hoisted on us over the years.

In fact, as our colleague Dr. David "Doc" Eifrig explains in today's Masters Series – adapted from the December 2017 issue of his Retirement Millionaire advisory – it's those fears themselves that plague us. As Doc notes, our finances are a big part of this epidemic...

The Real Epidemic Facing the Modern World

By Dr. David Eifrig, editor, Retirement Millionaire

We face an epidemic of stress...

Back in 2016, the American Psychological Association's Stress in America report showed we had a jump in overall stress levels... the first such movement in 10 years.

Think about that...

During the 2008-2009 financial crisis, we didn't see this kind of jump in stress levels. The market bombed, banks went out of business, businesses shuttered up and down Main Street... but stress didn't increase.

Compare that with today... The market is hitting all-time highs, the economy is growing, yet stress is still increasing.

Top stressors for Americans include money, work, and the economy. In fact, 62% of the folks in the 2016 survey said that money would be a significant source of stress in the next several years.

Fixing your finances can also cause a lot of stress. Finances and money questions lead to stress by their nature.

It's hard to avoid. If you're an engaged investor, you were likely stressed in 2009 when the market was at painful lows. And you're probably stressed now that it's near unprecedented highs.

It's not healthy to be continually distressed about money.

But it doesn't take much to put your financial mind at ease and nudge your body into a deeper sense of contentment and relaxation. It takes just a few minutes.

We'll start with the fact that we all do extraordinarily dumb things with our money – needlessly stressing ourselves to no benefit...

Money Makes Us Idiots

In August 2017, the Powerball jackpot reached $700 million and a bit of lottery frenzy ensued. That's when the financial website Business Insider decided to run an experiment. A reporter stood by a lottery stand and offered to buy people's freshly purchased tickets for up to double their face value.

Most folks clung to their tickets as if they had already won.

This makes no sense. We all know that those tickets will likely be worthless after the lottery drawing. Even before the drawing, when those tickets have some value because they have some (infinitesimal) chance of paying off... if someone offered you double the price, you should take it... If nothing else, you can go buy twice as many lottery tickets. (That would up your chances from one in 292 million to one in 146 million. How could you lose?)

But the point is this... folks make weird decisions. In the case of lottery tickets, something in our animal brains creates an attachment to that ticket. Once it's ours, we value it more. And what if we gave away the winning ticket?

Our brains automatically work this way, but it doesn't help. It only hurts. This example is a little frivolous, but we make real, costly mistakes worth hundreds of thousands of dollars when investing or planning our retirement strategies.

This weekend, we're going to try and clear up some of these behavioral biases...

After all, your finances will always be stressful. But if you can cut out the simple mistakes that everyone tends to repeat, you'll be able to save and earn more.

You just need to conquer some of the boneheaded things we do that feel right at the time... but put us in a worse position.

First Rule of Making Money: Lose Money

Think of a coach who says, "I like to win, but I hate to lose."

This is known as "loss aversion" – the idea that losses have a larger psychological impact than gains of the same size.

We hate to lose. And folks especially hate to lose money. Sometimes it drives us to leave money on the table. From a study by the DrKW Macro research firm...

Three hundred fund managers were asked this question, "You are offered the following bet. On the toss of a fair coin, if you lose you must pay £100, what is the minimum amount that you need to win in order to make this bet attractive to you?"

In a perfectly rational world, even just £101 would make for a good bet (if you could make it repeatedly).

But the fund managers wanted almost double that... an average of £190. They weren't willing to risk a loss unless the money was far in their favor. It turns out, people dislike losses about two times more than they enjoy gains.

This applies to investing as well...

We've all held a stock that's headed down. And we've all – at some point or another – kept holding, hoping to get even. "If it could just get back to my buy price, I would sell and move on."

That whole time, you've got your capital tied up in a stock that the market has soured on. Meanwhile, other stocks are shooting up left and right.

Believe me, the dollars you earn by "getting even" are no more valuable than the dollars you'd earn by switching to the stock of a better business.

You should cut your losses and move on... But many investors simply can't do that.

Folks become emotional with stocks that turn into losers.

It's not just you. It's built into our brains. It's hard to let go.

In a seminal study by Terrance Odean of the University of California, Davis, an analysis of 10,000 individual brokerage accounts found that investors held losing stocks for a median of 124 days versus a median of 102 days for winning stocks.

We're too quick to sell winners lest we give back some of our gains. And it costs us money.

Good investors have to stay rational in the face of a down stock... But we're humans first, investors second. We simply can't be trusted to keep our emotions in check.

That's why we use stop losses.

A stop loss is simply a predetermined price that tells us it's time to sell. For example, you may decide to sell a position if it drops 25%. We typically use trailing stop losses that adjust higher as the stock price rises. That protects more of our gains.

The key is to set your stop when you open a position and honor it when the stock declines to that price.

As soon as we hit our stop, we sell. No questions asked.

We don't let our emotions influence us. Losses hurt, but in the long run, the discipline will pay off. It's better to take small losses on a stock you love than hold a loser too long and incur a devastating loss.

On the other side of the spectrum, loss aversion leads to selling winners early. That's what most investors are fighting within their psyches today...

In tomorrow's Masters Series essay, we'll take a deeper dive into that concept.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig

Editor's note: After the market's wild swings recently, it's easy to see how financial stress could overwhelm many folks. But it doesn't have to be that way... During the first-ever Bull vs. Bear Summit earlier this week, TradeSmith CEO Dr. Richard Smith shared one thing every investor should do right now that will allow them to sleep much better at night. If you missed the event, you're in luck... You can watch a replay for the next few days right here.