The most important thing to remember is that these types of events (such as the one occurring today (March 9, 2020) in global stock markets) tend to cause panic. Panic is not necessarily an emotion that people have a lot of experience dealing with. Our lives, for the most part, involve routine. 5 days a week, people get up at the same time, have a relatively similar morning routine, head to work, do a certain task, return home, and relax in the evening. On the weekends, people might sleep a little later, work on a particular project, or spend more time with family. In comparison to human history, we’re living in a time of luxurious safety and comfort.
The easiest way for a person to figure out if they are panicking in response to the sudden drop in global financial markets is to compare what they’re thinking of doing, with their financial strategy. I would be surprised if many investment strategies dictate that a person should sell their assets when the markets fall more than 5% on a Monday. If they’re thinking that it’s time to sell, they might be starting to panic. If they’re thinking that the markets are going to fall forever, that might also be a sign of panic.
Before investing, many people developed a strategy. Now is the time to heed the advice of that strategy, or the professional who helped build the strategy. It can be very tempting to divest at this moment. If someone escapes from the markets, they wouldn’t have to worry about them anymore. They wouldn’t have to fear global (and personal) financial catastrophe. Two sentences ago, is the key to dealing with this whole mess. Escape.
A financial strategy includes provisions for what to do in case of a bad day (or week) in the markets. An advisor or personal strategy is handling things. Most people are not going to sell in a panic. They just want to stop feeling so anxious. They want to escape the panic, which is a totally natural and healthy response.
Now is the time to use the tools available on whichever apps or websites people use for getting world news. If they’re using a news app, it might be a good idea to take business news away from the feed for a few days. If they go to websites, they might want to try picking ones that don’t focus so heavily on finance. All of the news that we’re getting about global finance is just reporting on the panic at this point. The market drop has already happened, it’s old news.
Dave Ponak is a psychologist who works in the Kensington neighbourhood of Calgary. In addition to his psychology education, he has a bachelor’s degree in economics from the University of Toronto.