Written by Linette Dobbins, CRP ® President/CCO
What is worse than being blind? “To have sight but no vision.” Helen Keller
Do you wonder what consequences today’s COVID-19 self-quarantine restrictions will have on our culture, businesses, investments, and our children long-term development? What are the memories our kids will have – no school or playground? Where are our friends? Will these kids grow up with a fear that buries itself in their subconscious for life?
Money messages in childhood and the language used around money do indeed last a lifetime. They come in a time when young little ones experience innocence and pain. Take a lesson from our grandparents who went through the great depression of the 1930s, and major wars. Many grew old never trusting banks or anything else. But if you talk to an older retiree, you might find that there are lessons in money they wish they had known earlier in life that would have made a huge difference toward their financial security.
If those depression messages, the fear of loss and deprivation, govern a person’s thinking they might hold a dollar so tightly that they choke it to death missing the many opportunities to have a richer life.
These are times when powerful emotions like these need to be understood and even managed. Many people today in this environment are dealing with the FUD Factor( Fear, Uncertainty, and Doubt). And what I have learned is the only emotion more powerful than fear is hope.
We need to lead through this time, reframe the fear messages but acknowledge that anxiety and fear are real. Others may have a different emotional reaction believing that this too will pass; a vaccine will be developed, and our world will return to a new normal. However, the FUD is a part of the process and we need to acknowledge it. We need to communicate with facts and education that can help provide a clear view of what is happening now and what might be a potential prognosis for the future.
FUD is real – acknowledge it and plan for contingencies.
We invest by putting our money to work into assets so we can make more money. When the stock markets become volatile, the fear of losing money seems to be the dominate mindset. Investors forget the principles of “buy low, sell high”. Instead individuals will sell on fear at the lows in the market thus locking in losses unnecessarily.
If you are going to need money for specific needs in the near term – retirement, finance education or to buy a house, you should not take any investment risks. Keep the money in cash. Keep all safe money separate from longer-term money that is earmarked for financial security and future income.
Investors who make investment decisions based on emotions will most likely suffer poor long-term results. In the two major FUD factors that I have seen: 1. FOMO – the Fear of Missing Out – as we witnessed recently from the cryptocurrency mania. 2. FOLE – The Fear of Losing Everything – This is the most powerful emotion. When market volatility results in large swings in the investment markets, it can cause people to sell-off and sideline their investments.
We saw this in the 2008 financial crisis. Those who pulled their money out of the market reacting to the sell-off subsequently lost out on getting their money back in the dramatic recovery. Market downturns don’t last forever and can create more opportunities. Like my grandpa, Kenny always said, “Find the pony in the horse shit”. We will come through this time in history. Let us choose hope over fear, action over paralysis, communication over isolation.
Any opinions are those of Linette Dobbins and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. Any information is not a complete summary of statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance may not be indicative of future results.
“Money – a place where our internal selves engage the external world.” Linette Dobbins, CFP®
Connect with Linette here: https://www.linkedin.com/in/linette-dobbins-a298413/
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