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One of the most important lessons I have learned about investor behavior recently came from…training my dog.
In December of 2025, my wife and I adopted another Labrador.
We had previously lost our lab the year before, and honestly, we never thought we would get another dog. For a long time, the answer was always “no.” Eventually, however, we warmed up to the idea and decided to adopt again.
This time, we decided to hire a dog trainer.
What I quickly learned is that dog trainers do not really train dogs. They train owners.
One of the first things the trainer told us surprised me. She said she does not use food rewards during training. Instead, she relies heavily on praise, voice tone, and positive reinforcement.
Why?
Because studies have shown that in a dog’s brain, the reward center lights up similarly whether the reward comes from food or positive verbal praise.
“Good boy.”
Excited tone.
Positive reinforcement.
And it has to be consistent. We do a little bit of work with him every day.
After five months, I can attest to how powerful this is. He is only seven months old, but people often assume he is much older because of how calm and responsive he is.
We give him treats, but never during training. Instead, we use tone, praise, and reinforcement. That alone is incredibly effective.
And what I recently came across in behavioral research taught me that humans respond much the same way.
The Psychology of Reinforcement
Researchers placed individuals into fMRI brain scanners and exposed them to two different forms of rewards:
- Financial rewards
- Praise & admiration
The fascinating part?
The brain’s reward centers responded almost identically.
In other words, praise is psychologically similar to financial gain.
Think about how important that is for you and your clients.
Most advisors spend enormous amounts of time focusing on portfolios, planning, tax strategies, and market commentary. All important things.
But many advisors dramatically underestimate the psychological power of reinforcing good investor behavior.
If you want someone to repeat a behavior, one of the most effective things you can do is praise that behavior.
Not generic compliments. Specific behavioral praise.
And you can praise someone today for behavior they demonstrated years ago.
For example:
“I was thinking back to 2022 when inflation was over 9%, markets were falling, recession headlines were everywhere, and you never panicked. Honestly, that is incredibly rare, and it is one of the things that separates average investors from truly successful ones. Most investors struggle during periods like that, and you stayed grounded in your plan. That is impressive.”
That conversation does several things psychologically:
- It reinforces discipline
- It strengthens identity
- It builds confidence
- It increases the likelihood of repeating the behavior later
This is critical because emotional decisions rarely feel emotional in the moment. They feel rational.
The real test for investors does not happen during calm markets. It happens during uncertainty, fear, volatility, and nonstop headlines.
That is why behavioral reinforcement cannot only happen during crises. It needs to happen consistently and proactively.
Periods like today, when many investors feel relatively calm, are actually ideal times to reinforce good decision-making behaviors before the next emotionally difficult market arrives.
Because eventually it will.
And when it does, investors who have repeatedly associated discipline with positive reinforcement will be better prepared psychologically to stay grounded in their plan rather than do what feels most natural in the moment, react emotionally
Related: Investing Lessons From Travel Delays, Market Panic, and Human Nature