It is a time of uncertainty, worry and fear.
But it is also a time of reflection, gratitude and appreciation.
Whilst we wish the latter was the majority of how people are feeling right now, it is not. So let’s talk about one of the most powerful and overwhelming emotions: fear. Because in order to combat it, we must confront it first.
Fear and horror are what anthropologists call biocultural. We all carry the same sorts of fears. Fear rarely considers the long-term; it is usually fixated on the here and now and how it could all go badly wrong in a hurry. It is steeped in worry, especially of the unknown. We identify two main sources of fear in the current situation that we know CAN be combatted.
Let’s break these down:
When we are loss averse, we experience a greater degree of emotional discomfort from a loss than the positive emotions experienced from a gain.
Loss aversion is the preference to avoid losing compared to gaining the equivalent amount. Because we innately prefer safe to sorry, we often choose the security of not losing over the excitement of winning. This can leave us both sorry and safe. As Charles Darwin once said, “Everyone feels blame more acutely than praise.”
So why it is important to combat this?
Because when we are too focused on not losing, we look past what we could gain from the situation. Now is the perfect time to think about your own goals, what you already have that you can appreciate, and even do those things that you ‘never had time for’.
We, as a team are using this time to focus on refining copy, redoing our website and implementing ideas that never got a chance to see daylight! We are also getting the opportunity to review our processes, systems and identify how we can serve our clients better. We aim to emerge from this crisis as a stronger team, looking to reengage our clients with new ideas and to be able to continue to grow as a business.
When pain from loss is always higher than pleasure from gain (Image: TradeBrains)
Confirmation bias is the bias whereby we see what we want to see, accept these desires as truth, and act accordingly.
“What you see and what you hear depends a great deal on where you are standing. It also depends on what sort of person you are.” - C.S Lewis. That's why for all of us, far too often, when we believe it, we see it.
Confirmation Bias: When we always look for the first source of validation supporting what we believe.
First, take the media with a pinch of salt, and allow yourself periods of switch-off.
Do you think anyone has ever asked the media, “do you swear to tell the truth, the whole truth and nothing but the truth?”. I’m sure we would all know the answer to that one anyway.
We say that there is a reason the media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media prefers to focus on short-term returns, market predictions, and negative news. So why let it be the only thing you see?
Try not to check your phone or the TV constantly when you’re working from home. Take the time to revisit what YOU believe in, your WHY and how all this impacts you, without taking on unnecessary panic.
As financial planners, we ask the questions and keep you on track. Also, just because you might be missing out on the excitement of winning right now, does not mean you are 'losing'.
Let’s all use this time to reconnect with ourselves, our loved ones and with nature (with caution if you are stepping outdoors!).
At the end of the day, we are here for you.