When markets and headlines become concerning, as they do just about every few months, remaining calm can be difficult – but is essential to making wise financial decisions.
Finding Your Calm
While we cannot control what happens in the world, the good news is that we can control the level of calm in our lives. Finding your calm is largely a function of what you choose to focus on.
James Clear, author of Atomic Habits, said “the most important skill we have is in controlling our attention.”
Where is your attention currently directed? Does it make you anxious or calm?
Finding Calm in Today’s Environment
Do you find yourself ensnared in sensational and dire headlines from current wars and global conflicts? Or do you consider how markets have handled past crises?
As you can see in the chart below, the market has historically generated significant wealth despite many wars and global conflicts over the years.
Reflecting on the fact that we have had crises before can help us put current concerns into perspective. Crises may result in temporary stock market losses, but history shows we are pretty good at adapting, adjusting, and moving forward.
Patience and discipline are the price to pay for long-term equity returns. Making sure we focus our attention on facts and helpful perspectives can help us remain calm and endure the crises well.
© The Behavioral Finance Network
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