When has it ever paid to panic?
This is a question i've been pondering over the last 24 hours. My Twitter and CEO.ca feeds have been full of newly minted corona virus experts and people who suddenly have a PHD in interpreting pandemic outbreak statistics.
Corona virus is scary. Got it. But does this mean we should all panic, sell everything, dig a hole in the ground and fill it with gold/silver bars, canned foods, and bullets? Oh, I forgot the infectious disease full body suits....
It always amazes how some people seem to thrive on fear. Their own fear, and inciting fear in others. The worse things look, the happier these people appear to be.
In my 40 years on this earth I have learned that panicking never helps. It doesn't even help sometimes. It literally never makes anything better, and bad decisions are often made from a panicked state.
I think it's important to draw the distinction between assessing a situation and seeing that it is dangerous and worthy of taking action, and then taking that action. However, taking action out of panic is ineffective. Urgency is good. Panic isn't.
In markets there are two damaging and dangerous emotions that repeatedly cause bad decisions and financial pain. Fear and Greed. When we act from fear and let it paralyze us and/or incite panic we make bad decisions. Just as when we act from greed and the fear of missing out (FOMO) we often end up buying tops, using excessively large position sizing, and getting into the latest fad just as it's on its way out of fashion.
Investing is a discipline and requires disciplined thinking and emotional awareness.
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