Optimism and pessimism can change your investing habits. The current pandemic or even election, breeds a lot of uncertainty and fear. The media actively participates spreading the fear. Headlines often accentuate the negative because that is what gets us to tune in.
Pessimism and cynicism are weirdly addictive. While addictive, they can also be destructive – both mentally and financially. Most of us don’t seek them out, but when we encounter them, we just can’t turn away. They can consume our thoughts and affect our mood. It is easy to be a pessimist. It is more difficult, yet more virtuous, to see the good – even in bad times.
Get All the Facts
We seldom get unbiased and complete information. Our knowledge of current events is largely driven by the news sources we frequent. The news we receive is filtered through someone else’s lens. We should question whether sources are reliable or to check that the information is true. We no longer can trust news at face value. We are humans and we all hear what we want to hear.
In difficult times like these, we can step back and see the good. We can choose to see the same facts in a different light. We can be optimistic. While it may not change reality, it can improve our perspective and ultimately our decision making. Optimism can change your investment behavior for the better.
See the Good
From this crisis, and as well as those in the past, we see much good in humanity. Religious, political and other differences can be put aside in a sense of unity:
- Many are donating time and resources making masks for front line workers
- Drive by parades for first responders, teachers, students, and high school graduates
- Sending notes, dropping off gift baskets, chalking uplifting messages on others’ driveways
- Families having time together – parents and children connecting on a deeper level
You Can Choose How You will come out of this
We humans are great at adapting and adopting. We will learn from this crisis and we can come out stronger and healthier. Our health habits will improve. Surfaces will be sanitized frequently. People will wash their hands more. And hand sanitizer will be the new American Express card – we won’t leave home without it. These habits will improve our overall health and well-being.
We can also make sure our behaviors don’t change investing habits.
What a great time to be alive! We are living in a significant period of mankind’s progression. We are learning to live smarter and safer, both for our own health and for generations to come.
Check out our mind games videos – for more information on how behavior affects our decision making.
©2020 The Behavioral Finance Network. Used with permission.