How to be smart and not panic
I wanted to share an opinion piece that more around behavioral psychology, a topic I enjoy studying, and how it relates to the recent Coronavirus outbreaks.
People are going to behave strangely. This should be a known fact when dealing with worry and panic. We aren’t built to be logical, calculating machines. As much as we think of the brain like a computer, it doesn’t work the same. We also tend to copy what others do through social pressures. There are experiments like the line selection test that show people follow suit in many cases. Because of this we’ll end up making silly decisions because other are.
How do we not panic?
Don’t react
We hear stories of people buying up all the toilet paper. The impulse one feels is to go buy some quick before there’s none left. Why did I say before there’s none left? How would I know that? I made an assumption. I don’t really know. I’m worrying and reacting to that worry. Before reacting, stop and assess. Am I being reasonable? How much of “X” do I have now? When will I run out normally? Would my neighbor let me borrow a bit if I ran out? Think it through.
Observe – Learn from other’s behavior
How are others acting around the world? We can use this to judge how people will act around us when the virus is nearby. It can help to prepare before the people around you start acting strangely. Observe and think about how you can get ahead of it. Also, observe to see if you need to worry when people are buying out store shelves. Are people starving or getting by just fine? You can expect the same results or similar results hear you.
Prepare
Instead of waiting, think about what to do ahead of time. Can you get a little extra food to fall back on if stores are a bit short? If the school closed what will you do? Will you continue to travel to the city? Can you ask your boss about work from home options? What if daycare closed?
Create behavioral rules for yourself ahead of time
Now that you’ve thought about the what-ifs you can set up some choices ahead of time. And when others are in panic mode you can fall back to your rules. Am I going to join the crowd buying up all the rice I can? No, because I have a week or two of food already. Am I going to buy face masks at $100 a box? No, because the CDC and others say face masks don’t so much help with those that are healthy, it’s more for the sick. Should I move into the cabin in the country? No, but I’m going to watch for school closures. I’m going to be aware of known cases around where I live so I’m able to limit interaction if I need to.
Follow recommendations
There are recommended behaviors with the Coronavirus. Although there’s no vaccine you can still take certain habits and make them your own. Wash your hands. Don’t go into work sick. Don’t work near someone sick (can they go home?) When appropriate don’t take part in public gatherings. Close up the school.
Investment Strategy
Is it time to sell everything? The bull market is finally over and you need to cash out? Let’s go back to panic decision making and that it’s not a good way to function. Long term investing isn’t going to succumb to the daily ups and downs of the market. Are you making withdrawals on your retirement tomorrow? Then you are probably already shifted into funds not so heavily impacted by the ups and downs. Are you withdrawing in 20-30 years? You don’t need to panic and start selling because you aren’t needing the money tomorrow. Investments do best when they sit for a long time. If you’ve taken a good approach to have a balanced set of funds then it’s just a matter of riding it out. Don’t keep looking at it every day. Look quarterly, maybe every 6 months, and otherwise leave it. If you’re more involved with you investments, looking for opportunities or selling when the company you’ve invested in then you’re already probably using certain rule sets that supersede the panic sell/buy. Keep following the method developed and avoid the emotional decision.
Avoiding News and Social Media
You don’t have to turn everything off entirely. But feeding your (our) own weakness isn’t helpful. Remember: other people’s panic becomes our panic. Lessen the input each day. Take a few minutes to look at news to be aware. Follow some of the links below for education. But don’t scroll for hours and hours on all the little news posts and social media worries people share. Limit your input and you’ll limit your worry.
Resources
Here are some resources for awareness and to help with planning vs panic.