It’s been a crazy week. Actually, it’s been a crazy year.
Impeachment. The democratic primary. Brexit. The coronavirus. Massive stock market declines. Travel restrictions. Canceling of the NBA and NHL seasons. Conferences canceled. Quarantines. Parasite winning the Oscar for Best Picture (OK, that was a good kind of crazy, I loved Parasite!).
Each of those news stories is huge, and we’re only 76 days into the year! We can’t know anything for sure, but it’s hard to imagine there won’t be many more major events this year – and not all good.
I find that the more I watch or read the news, the more anxious I am. The more anxious I am, the more I want to “take control” of the situation. I just want to do something – anything.
For investing, that’s a dangerous place to be! We have control over what we invest in, and it can feel like by cashing out our investments or changing things up, we’re doing something positive. If those changes are in line with your own rules for investing, then they’re likely positive changes. If you’re reacting to the news to make your choices outside of those rules (or don’t have your own rules) then it’s a good time to take a step back and see what’s motivating you.
Focus on What You Can Control
I recently started reading a philosophy book: Stoicism and the Art of Happiness: Practical wisdom for everyday life: embrace perseverance, strength and happiness with stoic philosophy. With everything going on in the news, this one comes at the perfect time.
If you’re unfamiliar with Stoicism (with a capital S), let me give a definition to help out:
In a nutshell, the Stoics said that the goal of life is to live consistently in harmony and agreement with the Nature of the universe, and to excel with regard to our own essential nature as rational and social beings.Donald Robertson, Stoicim and the Art of Happiness
It’s a focus on remaining calm in adversity. Adversity can mean facing down a dragon or reacting to a news article. There’s nothing Stoic about not showing emotions, about being withdrawn, or repressing feelings.
This differs from being stoic (with a lower-case s), which focuses on showing self-control in the face of difficulties – even if inwardly you’re screaming.
I’ve been interested in Stoicism since I learned about Cynics in a college Philosophy class. Cynic Philosophy is very similar. For Cynics, the purpose of life is to live in virtue, in agreement with nature. Another one where the lower-case “cynic” version is completely different from the philosophy.
What it means to live in “agreement with nature” changes over time as the world finds new ways to fuck us over.
In Stoic philosophy has, there’s an idea that the chief good in life is eudaimonia. Eudaimonia is usually translated to “happiness” or “fulfillment”. Stoics believe that to achieve eudaimonia, you need only be a good person, then everything else falls into place.
For the modern investor, I believe it means investing in accordance with your risk tolerance taking into account the social impact.
It’s about creating a plan that lets you sleep at night without constantly checking your investments.
It’s about creating harmony even when your investments drop by 50%. It’s not about feeling nothing when that happens, but creating a portfolio where you know it can happen and accepting when it does.
Negative Visualization Practice
One way to help achieve this harmony is the practice of negative visualization. Imagine you’ve just completed a project. The next thing you do is a post-mortem to understand what went wrong.
Negative visualization is essentially a pre-mortem. It’s looking at everything that could go wrong before the project starts. Imagine what would happen, how you would react and what you could do about it. This isn’t done to stress you out! When I practice this it does a few things:
- It helps me better plan so that the worst-case doesn’t happen.
- If the worst-case does happen, I know I prepared for it.
- I’m mentally prepared for the worst-case and how it’ll affect the project and my life.
Negative visualizations, when done repeatedly, can help stay calm in the face of major life events. If you’ve already imagined the market declining, getting the coronavirus or caring for family getting the coronavirus then guess what – you’re already doing negative visualizations!
The next step is taking control over that vision of the future and understanding that it’s just one potential outcome to prepare for.
Ok, Back to Finances
I’m certainly not calm and prepared in all scenarios myself. Even with negative visualizations, there are some things that still make my pulse race.
Take my investment balance around the time I left my job:
Between when I gave notice at my job and the low point on Christmas Eve a week after I retired, my portfolio lost over $800,000 or about 32%. This happened because half of my investments were in volatile company stock that I couldn’t sell combined with a falling stock market.
This is pretty much every retiree’s nightmare scenario. Or at least I thought. In my case, the portfolio partially recovered, ending up only down about $300,000 from it’s high. For me, it was the difference between retiring with 33x saved up and retiring with 28x in savings.
Side note: Right now, we’re looking at 23x in savings. Not exactly where I wanted to be. This changes from day to day. By the end of Monday that could be 20x or 25x.
The situation facing today’s investors is even worse. There’s an actual pandemic happening which could devastate families and businesses. It’s unknown today when the markets will recover. And who knows what’ll happen politically.
When I get to this position, here’s what I do:
Take a step back, turn off the news, breathe and take a look at what you can control in your life.
Control of where you are. There’s only so much time you can spend stuck at home. Even if you are home, you can do your best to make your surroundings more hygge – A Danish and Norwegian word for a mood of coziness and comfortable conviviality with feelings of wellness and contentment. A few scented candles and some calm music can go a long way to relieving stress. As a bonus, these aren’t sold out everywhere.
Control of what media you consume. Be honest with yourself about how much media you’re consuming. Is it helping? Sure, there are new things happening constantly. Just in the last 24 hours since I started this blog post the stock market dropped by 10%, Federal Reserve is pumping $1.5 trillion into the markets, the NFL and NBA seasons have been canceled, the virus has been declared a pandemic and the US has issued a national emergency.
In that same time period, I found a really nice hike outside Salt Lake City (Thayne Canyon Loop Trail), Mrs. Minafi and I played some board games and we found a new use for the Pok Pok Som Ginger Shrub in the form a cocktail. Nothing on the national news impacted our day, other than by making me more nervous about the world’s future and our own finances.
Control of what your reaction is to what you consume. There’s a Stoic idea that you have control over your emotions – they don’t control you. That’s easier said than done when you’re bombarded by apocalyptic forecasts. You can choose to react with panic, with action or with calm.
Control of where your news is coming from. In January, I decided to take a break from Twitter. This meant I missed out on a lot of connections, conversations, and information that I enjoyed – but it was at the cost of a constant stream of news and opinions on that news. I miss parts of Twitter, and I’ve since added it back into my life in a more intentional way. I only go on for at most a few minutes a day, and only from my computer browser and never in the morning.
Control of what you invest in. If you’ve never made an investment policy statement, now’s the time! Come up with your own rules that determine how you invest, how you adapt when markets shift, how you rebalance and a few other very important questions. Sign up to read this course online, or get it via email.
Control of your asset allocation. Your asset allocation and how you diversify your investments is the best indicator of your risk. I’ll be honest, in the Great Recession, I had no idea what risk tolerance was until I lost half of my investments in under a year. I wrote about this a while ago: My Takeaways from the Great Recession and Why I Still Invest in Bonds.
You may not know your ideal asset allocation for your risk tolerance until you experience a sudden loss. That’s OK! Now you have more information to make that allocation going forward. It doesn’t mean you need to switch to 100% cash either. Find what asset allocation you believe you could be happy with for the next 10, 30, 50 years or more (and be OK with the idea that it may change again later).
Control of How You Relieve Anxiety
First off, I’m not a mental health professional. If you have serious medical anxiety or depression, it’s better to talk to a trained professional than read a blog by someone with no medical training.
For many others that experience ups and downs, there are countless ways to relieve anxiety. From alcohol, smoking, and drugs to running, hiking and biking. I’ve noticed I pet my dog a lot more when I’m anxious – which helps.
As the stock market drops or you read articles about the coronavirus, also make a plan for how to relieve that anxiety that you’re holding onto. I’ve been trying to do this myself lately. Here are a few of the areas I’ve used to relieve stress.
Exercise. Go for a run, go to the gym, lift some weights, take a yoga class, go to a climbing gym, go on a bike ride, take a
Nature. It’s been proven that spending time out in nature helps relieve anxiety. Go for a hike, check out a park, find a garden, find an open space, go somewhere with a birds-eye view.
Games. There are few things as immersive as playing a game. Whether it’s a video game, board game or sport – you’re rewarded for focus and getting into the flow. We’ve been playing a lot of Mario Kart 8 on Switch and Wingspan ourselves.
Create. Focus your time on creating something. That could be something just for you like a bullet journal or a vision board. It could be something public like a website, a blog or a book. It could be something just for the hell of it, like following along with a tutorial online. We love following along and cooking a new recipe – something we can do over and over.
Family & Friends. Total isolation isn’t helpful. Even with social distancing, you’re going to want to spend some time with people. Finding time to be with friends and family can help ease anxiety (obviously depending on your friends and family). We’ve played Mario Kart with the family with an open call to voice chat, climbed local mountains with friends, and met up with random people at meetups to talk with likeminded strangers.
Look For Opportunities
I’d love to say that I’m terrific at all of these, but that’s absolutely not the case.
I consume way too much news, often through The New York Times, The Daily Show or Last Week Tonight. I let myself stay cooped up in my apartment on days when it’s beautiful outside. I let myself nitpick at my investments trying to overoptimize, even though I have my asset allocation and my rules for investing guiding me. I obsessively check election results to see if my candidate is winning (yeah, I’m feeling the Bern).
Once I get to the point where I realize I’m anxious, then I can figure out what to do about it. Usually, that comes back to the same thing: journaling.
I open up a blank page in Notion and start asking myself questions. Then I write the answers. These aren’t for my blog, or for anyone else to read – they’re just for me to help collect my thoughts and center myself.
Recently I was a guest on the Investing For Good podcast. One of the questions was “Share one hack with us that might help the audience“. The one that came to mind for me wasn’t financial or real estate related – it was journaling!
In the fitness world, there’s this great book called Becoming a Supple Leopard: The Ultimate Guide to Resolving Pain, Preventing Injury, and Optimizing Athletic Performance. The name is quite a mouthful, but it focuses on self-care for athletes.
One of the common threads of the book is this:
All [capable] human beings should be able to perform basic human maintenance on themselves.Becoming a Supple Leopard
“Basic human maintenance” is being able to understand what your body is saying – and getting help for whatever needs it. This help can mean stretching sore areas, working on your weak points, physical therapy with an expert or seeing a doctor if you think you have the Coronavirus.
The same is true for the mental side. Try performing “basic human maintenance” on yourself and see what turns up. Maybe it’s something you can work on by yourself through journaling, or by talking it out with a friend or spouse.
This is similar to the Stoic practice that Marcus Aurelius used. This Roman Emperor would journal about his own actions and emotions as well as his reactions to them. After his death, there were published as Meditations, a collection of concise thoughts.
If your journal is anything like mine, you don’t need to worry about other people reading it after your death. It’s just for you.
Journaling is not the answer to all problems. In the same way, you’d see a physical doctor for your most serious physical issues, you may need to see a mental health professional for your most serious mental and emotional concerns.
Zeno, the founder of Stoicism, has a quote I love about finding happiness that always rings true for me:
Happiness is a smoothly flowing life, where the mind adapts to any circumstances befalling us.Zeno
What can you do today to have a smoothly flowing life?
Whatever the result, I encourage you to have a routine check-in with yourself. And when in doubt: go fly a kite (assuming you can do so away from others).
What about you? How do you check in with yourself? How do you dig your self out when you find yourself caught in a hole?
5 CommentsWhy not add to the conversation below? Your voice is welcome!
March 16, 2020
Thank you Adam for offering sound practical advice and ideas on how we can strive to connect to that “smoothly flowing life” during these turbulent times.
March 22, 2020
March 22, 2020
Very calm and rational though. What is your net worth now after this downturn? Did you get out of that one position company stock?
I’m buying more but it is painful. What financial moves are you making.
Mr. 39 Months
March 23, 2020
Good article and summary of stoicism and how it can help during these times. I’ve written about it as well, and linked to your article now.
Didn’t realize you had lost that much right before retirement. Ouch! My plans to hit my FI goal was for July 1 of this year – don’t think my number will be there now. We will see.
June 8, 2020
I agree, having being able to control what we can in these times is important. I also think it’s important to control much media you expose yourself to, too much is not a good idea. Great article. Thank you!