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How to react to negativity

How to react to negativity

| February 02, 2015
Self control

"Life is 10% what happens to you and 90% how you react to it." - Charles R Swindoll

Perhaps diverging a little from financial planning, perhaps not... Take any aspect of life and the above quote applies rather well. Finance, health, faith, social, work... It may be more how we deal with life's obstacles than what obstacles are put in front of us that defines us. 

For relevance, we've had interesting weather this January, no Polar Vortex like last year, but the mixture of rain and wind then freezing temperatures left many of us scraping through an inch of ice this morning. Uncannily similar to how the volatility in the financial markets last week. The S&P 500 looked alright, then volatility increased, sectors sold off, and at the beginning of this week/month, we get to wake up to a stack of losses in our portfolios. That's horrible right?! All a matter of perspective.

Uncomfortable weather is part of life. We often let an inch of ice dictate our day when we could react better. Sounds simple - how many of us get up, look outside, see that we need to shovel/scrape out in the bitter cold and quickly become anxious and bitter ourselves?  Common reaction, possibly not the healthiest. How many of us choose to see that as an opportunity to get our car warm and clear for our commute to work, understanding it's an obstacle in the way of a productive week and charge into the cold with determination? That could be a little healthier of a response.

Approaching financial obstacles with optimism and a forward looking perspective can reduce the stress and anxiety associated with overcoming them. Do we approach investing with the understanding that market trends upward over longer periods of time, companies like improving profitability and this whole investing thing is something people do to try and protect or grow their assets and corrections are part of the market cycle? If so, we may be able to look past a -3.00% pull-back to start the year. We can see that a -19% late summer pullback (2011) doesn't mean we're going to lose everything. Or that even the worst financial crisis that the US has seen in decades (2008) isn't the end of the financial world even if it looked like it early 2009. Similar to bad weather, "historic" storms, floods and the like get in the way of us enjoying life - momentarily. It's our choice to look at them as obstacles to our enjoyment rather than seeing them as the bane to our existence. 

Moral of the story - we get to choose how we react to what happens to us plain and simple. Some are absolutely greater than others, we don't discount that. The question is, are we making molehills into mountains or mountains into molehills? By choosing the healthier reaction, we have a better chance to stick to our financial goals rather than selling when we should be buying and vice versa.