Now Is Not the Time to Panic

Inflation at its highest rate in four decades. An ongoing war in Ukraine. Supply chain problems. Continual political division that somehow seems to keep getting worse. Climate change and the perpetual arguments over power sources. You only need to spend a few minutes looking at the news to be overwhelmed by a handful of reasons that make it seem like our society is on the brink of falling apart. The news always has a negative focus because for some reason “airplane crash” gets a lot more views than “world hunger decreased by 5% this year,” but the news seems to have a much higher level of negativity to it lately. “Doom scrolling” is a term I have heard used more in the past few months than I can ever remember hearing throughout the rest of my life.

One of the more difficult aspects of processing current events is that pessimistic views often sound more intelligent and realistic than optimistic views. The person on the news, or your colleague at work, or your friend visiting in your backyard who is explaining all the reasons society is currently crumbling sounds smart and well-informed. I think a lot of the reason why it feels that way is due to how we often think about the past. We allow nostalgia to take over and focus on the good things in the past. We forget about the day-to-day reasons 20 or 30 years ago that the world felt as if it was on the brink of disaster like how it feels today.

My primary strategy for dealing with this problem is reminding myself to frame things in a mental Venn diagram. On one side are “important things” and on the other side are “things I can affect.” I do my best to only focus on items in the overlap. If it is important, but I have no way to impact it, it is not worth my time or energy. Worrying about something that I have no chance of affecting, even if it is important, only produces negative outcomes. If it is something I can control, but it is not important, it is also unlikely to be a good use of time or energy. This Venn diagram approach is a good strategy for life in general, but also for personal finance. I am not going to change my investment allocation because inflation is temporarily high. I am not going to sell my house and rent because a guy on the news lists some smart-sounding reasons that a housing crash is about to happen. I am not going to convert all my Traditional retirement accounts to Roth accounts because a colleague thinks tax rates will double over the next decade.

Now is not the time to panic. It is very unlikely that panicking is ever the right answer for long-term investors using long-term strategies to reach long-time goals. Stay the course. Focus on important things that you have some control over. This too shall pass.

Justin Berry

Author: Justin Berry

Justin is an independent financial planner who believes in building relationships with his clients based on financial education and blunt honesty. His goal with everyone he meets is to reduce their financial stress and help them avoid costly mistakes.

Registered Representative of Cetera Advisor Networks, LLC and Investment Advisor Representative of Cetera Investment Advisers, LLC.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

5459507/DOFU 2-2023