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How to Handle These Uncertain Times Thumbnail

How to Handle These Uncertain Times

By Bryan Lee, CFP®, MBA

The amount of information and the speed with which it is coming at us is truly amazing. The COVID-19 virus has disrupted everything: the health and safety of ourselves, our friends, relatives, and clients, as well as the near-term stability of the economy and investment portfolios.  

We would like to thank so many of you who have reached out to check on us through this difficult time. Yes, we worry, but our mission is to do the worrying on your behalf so you don’t have to. We think a lot about each of you and we continue to look for ways to not only limit any damage of a market downturn but also to make sure you are all in a position to weather this storm as best as possible.

Rely on Us, Not Your Emotions 

Although we are working to stay on top of each development related to the COVID-19 pandemic, it’s still impossible to know how long it will last, how to measure what economic impact it will have, or have any clear insight into how long it will take markets to recover. Those of us who have experienced major market downturns remember how unexpected they were, how experts and pundits were caught by surprise, and how wrong many were when they tried to tell us what was coming next.

As my good friend Bob Veres first taught me, the human brain has three parts: the cerebral cortex at the top (which makes us logical and reasoned humans), the cerebellum below it (which coordinates muscular activity and which makes us emotional creatures), and then the limbic brain at the top of your spinal cord, which controls the fight, flight, or freeze reactions. This bottom area of thinking tissue has a similar intelligence to a lizard and is sometimes called the “lizard brain.”

When humans encounter uncertainty, which the brain could interpret as a threat, the mind instinctively retreats to the lizard brain. There’s no doubt that our most recent events would fall into this category for most of us.

We understand that many people are frightened—which is certainly a normal and expected reaction given the circumstances. When this happens, our instincts can impede our ability to respond rationally as our brains go into fight-or-flight mode. Research suggests that simply talking through our fears can be helpful, as doing so can activate rational thinking and move us out of our ingrained reactions. All that to say, we are here as your shoulder to lean on. When you start to worry or are overcome with other emotions, please reach out to us. That’s what we’re here for. 

Now for the practical. Here are 4 things you can do right now to help you in these turbulent times.

1. Keep Your Emotions in Check

This isn’t easy, but it’s critical. Too often we fall prey to the herd mentality and lose sight of what’s wise or important to you. Once emotions take over, the likelihood of taking actions you will regret later is likely to go up exponentially. Something I am known to regularly say is, “The only two days that really matter in investing are the day you buy and the day you sell. All the ups and downs in between are simply noise.” If you can learn to ignore the noise and stick with your investment plan, you’ll do just fine.

2. Set Boundaries Around Your News Consumption

Sensationalist headlines abound right now, so it’s essential to separate the actionable information from un-actionable information. For example, news about school closures or advice from health officials is good, actionable information. News about market drops or volatility is likely not beneficial or actionable. Much of the news about the market and coronavirus is great for staying informed and up to date, but it may not be great for your mental and financial health.

That may mean unsubscribing from certain emails and push notifications. There’s no value in getting daily (or hourly) market updates if you intend to invest for the very long run and are doing the things we’ve been teaching, such as diversification and dollar cost averaging. The market will have good days, bad days, great days, and terrible days. There’s absolutely no benefit in putting yourself on high alert with every move that it makes.

3. Look For the Good in Others

With all the bad news we’re getting, train yourself to look for the good, trusting in your neighbor and society as a whole. Healthcare workers, first responders, military, employers (and the list goes on) are all doing wonderful and heroic work. The human race has proven its ability to adapt, invent, transform, and make the world a better place. And that, in the end, is what fuels a strong economy and financial market. 

Worldwide chaos and terrible news have been around forever, and somehow we live through it. Imagine what your ancestors felt during the Great Depression, the World Wars, or the many other challenges this country has had to face. Americans have risen to the challenge when called upon, and I’m confident that, not only we as a country, but the entire world will rise to resolve this crisis and be better prepared for when we face our next crisis.

4. Focus on What You Can Control

There’s a lot we can’t control right now, but you can control your thinking and your reactions to what is going on around you. When possible, try to reduce your expenses, at least until we better understand the scope and breadth of this challenge. We will continue to coach behaviors that we believe are in your best financial interest, while looking enthusiastically for opportunities emerging from this health and economic crisis.

Don’t forget to practice self-care and turn to the things that ground you and bring you back to what’s most important, whether that’s prayer, meditation, exercise, making time for friends and family via Zoom or FaceTime, or just working on self-growth. Now might be the time to tackle things you’ve previously put off, such as learning to play an instrument, learning a new language, or starting a new hobby. 

We Are Here for You

As always, we will work diligently to identify the opportunities this crisis has given us to add value to your financial lives. Depending on your circumstances, this may be simply encouraging you to stay the course, refinancing a mortgage or line of credit, harvesting tax losses and reestablishing cost basis across a portfolio, working on Roth IRA conversions at these lower valuations, or redeploying cash at a time when stocks are on sale. 

As we work together to navigate through the unprecedented challenges of the day, we at Strategic Financial Planning are committed to helping you reach the best outcomes possible and are only a phone call or email away. Continue to have faith that we will soon have this virus under control and we will all be able to get back to our own normalcy. Call (972) 403-1234 or contact us online to schedule a phone or virtual appointment. 

In the meantime, stay safe, practice compassion, and be kind—we’re all in this together. 😊

About Bryan

Bryan Lee is founder and President of Strategic Financial Planning, Inc., an independent, fee-only financial advisory firm. With over 27 years of industry experience, Bryan uses a unique client-first financial life planning approach and process to help his clients get the most out of life. Bryan earned his Bachelor of Business Administration in finance and MBA in international finance from the University of North Texas and is a Certified Financial Planner (CFP®) practitioner. Bryan is actively involved in his community and industry and has served on the boards of several associations and charities, including serving as President and Chairman of the Dallas/Fort Worth Chapter of the Financial Planning Association, the National Association of Personal Financial Advisors, the CITY House Board of Directors President and Chairman, Editorial Review Board of the Journal of Financial Planning, Family Services of Plano, as well as a Junior Achievement Volunteer Teacher. Bryan has been featured in local and national magazines, newspapers, and journals, including The Wall Street Journal, Investors Business Daily, CNNfn, USA Today, SmartMoney, Kiplinger’s Personal Finance, Financial Planning Magazine, The Dallas Morning News, Dow Jones Newswires, and has been recognized as a Five Star Wealth Manager and one of Dallas’s Best Financial Planners in D Magazine every year since its inception. To learn more about Bryan, connect with him on LinkedIn.