By Doug Gjerde, Managing Partner, Wealth Advisor
I am uneasy with uncertainty and crave a precise, predictable world. Are you like me? Science demonstrates that you, like most humans, probably are.
This conflict in our minds during a crisis creates mental and physical stress, often tempting us to act in ways that are unhealthy. Those reactions come from the part of our brain that evolved to protect us from Saber-Tooth Tigers. That makes us adept survivors, but also vulnerable to scams, poor financial decisions, and regret. Saber-tooth tigers are extinct, but our “fight or flight” tendency isn’t.
Often we want the pain and discomfort to end, and we take actions that we think will offer relief. Frequently, those actions hurt us in the long run. Drinking a lot of alcohol can dull the pain in the short-run but besides a hangover, causes more harm in the long term. Not only does it not fix the problem, it will probably make it worse. Rash financial decisions often result in similar long-term harm, but sometimes feel good at that instant.
We are in a crisis; it is a national and global emergency. It is understandable and natural to feel fear in this crisis. There is a disease running rampant that could kill us or those we love. On top of that, it is a new disease that came from a foreign location. It is not the flu that humans have dealt with for millennia but something new. The market has fallen precipitously, and the economy is in a recession. Millions of people are unemployed.
It is natural for this to create fear. The right responses often don’t provide us the immediate relief we crave.
Often we act in a way that gives us immediate relief but harms in the long run. The markets and economy aren’t saber-tooth tigers attacking us, and the ‘flight or fight’ response is not helpful in this situation. But the feelings are still there. Often, the right action just doesn’t feel good at the time.
Amid the Great Depression, the US President Franklin Roosevelt famously said, “The only thing we have to fear is fear itself.” He then went on to warn about, “Nameless, unreasoning, unjustified terror which paralyzes needed efforts.”
The depression was an excruciating and scary time for millions across the world. Yet, it eventually passed and led to terrific economic times and scientific and technological progress that surpassed that of all of human history before the depression.
Fear has caused some of the most regrettable actions in human history. This crisis is extremely unlikely to be the end of civilization as we know it. We, humans, are a hardy bunch. We innovate and work together when things get tough. We can get through this and come out the other end in better shape than we started.
This morning I was reminded (by of all people, Mel Brooks) of a famous song during World War II titled We Did It Before, And We Can Do It Again. We did, and we will.
I don’t’ know precisely how we’ll get through this in the end. But I know we must, and we will.
If you are feeling uncomfortable and want to do something to lessen the financial pain, call us. If you are nervous and need someone to talk to, call us. That is what we’re here for, and we feel the pain too. We’ll get through this together.
The opinions are those of the writer, and not the recommendations or responsibility of CWM, LLC.