This is a serious time and it requires serious action, and it’s gotten me to think about how people respond when they’re faced with that tasteless, odorless, scentless thing called uncertainty.
And i am talking here about uncertainty and not risk, they’re not the same, all risks are uncertain but not all uncertainties are risks.
So, you can see it in the stock market on a pretty much daily basis as things continue to seesaw from record highs to record lows.
The only thing that you can guarantee right now is that things will continue to remain uncertain. But if you prepare accordingly, this should not be a time to panic.
This is what I like to call the axes of uncertainty.
When faced with uncertainty, we have very limited options with what we can do and how we can react.
You’ve got those who are under prepared, those who are overprepared, and everywhere in-between, and people who react emotionally with a range from panic to calm.
On the Top-Left from the image above, we’ve got those who are panicked and under-prepared :
You recognize that there’s a problem. That you should probably do something, but you’re just so damn scared that you fail to take any kind of action.
They’re usually the first people to be eaten by zombies.
I mostly feel bad for these people.
On the Down-Left, we’ve got those who are under-prepared and calm :
At a time like this, your parents are probably down there. You might find yourself down there for a few reasons.
Maybe you’ve become desensitized by the media always fear mongering that when a real crisis happens, you don’t believe them.
Maybe you trust the wrong sources entirely.
Anyway, not a good place to be. It’s not a great place to be because you’re not thinking critically and when it’s really important to take action, it’s either too late or you failed to do so.
Zombies are gonna eat these people as well.
On the Top-Right, A lethal combination of panic and over-prepared :
These are the people who go out and buy a year long supply of toilet paper,oh. I don’t blame them, really, because panic is know to cause massive bouts of diarrhea. But when you clear out all the hand sanitizer and canned soup, you’re being not good.
It’s both selfish and shortsighted.
They’re so panicked that they aren’t rational enough to prepare mindfully and as a result, they too get eaten by zombies.
Don’t be that person.
Finally, down in that lower right quadrant is really where you want to be. You’re cautious, you’ve taken the necessary steps to prepare, you’ve got enough non-perishable food and essential medical supplies to last you a few weeks, and you remain calm knowing that you’ve done everything you possibly can.
And as a result, you’ll probably be able to fight off the zombies.
But even if you are calm, admittedly, you can still be over-prepared. And what to know is the law of diminishing returns when it comes to preparedness.
The more you prepare, the better you’ll be able to tackle whatever problem it is that you’re facing.
Continuing to prepare beyond that has diminishing returns. At this point, you’re simply wasting your time. And it could crash even further when people’s opinion of you and your community change because you hoarded all the toilet paper because of your diarrhea panic.
The real beauty of finding your sweet spot on the axes of uncertainty, and a lesson that can be applied to any major project in your life.
You follow a simple checklist :
Do enough research to make an informed decision.
Take effective action without overdoing it.
Stay calm knowing you did all you could.
Adjust your plan as new information comes out.
So, this is personally how I approach my retirement investments. And it’s precisely why I’m not freaking out, and I’m not panicked right now that there are such highs and lows, and that it is so volatile at the moment.
Because you have to look at it long-term, big picture.