Somehow not too long ago, I found myself going down yet another rabbit hole on YouTube. This time I was learning about a water survival technique where SEAL trainees learn to stay afloat with minimal effort while maintaining calm in challenging water conditions, even with their feet bound together and their hands tied together behind their backs.
It was fascinating! In fact, I WILL be trying this in my own backyard pool.
Some of the comments on the video I was watching were just as interesting as the training itself. Here’s a short sample:
- “That last couple seconds made my anxiety go through the roof!”
- “It’s probably easy if you’re relaxed and don’t panic”
- “I tried to sink in the pool and realized that by holding my breath I was only causing myself to float but by exhaling I was able to sink. It’s crazy how something so simple can be so hard and relies on training your body and mind to be able to do these things consistently while being underwater…”
My favorite comment was, “it’s probably easy if you’re relaxed and don’t panic.” Wow. You think so?!?
I heard Steven Furtick tell a story the other day on one of my favorite podcasts, The Ed Mylett Show. His daughter had a goal at age seven to swim from one end of the pool to the other underwater. Of course, she wanted to best her older brothers (who have her by two years) by accomplishing this goal. In preparation for the task, like any good father, Steven Furtick told his daughter about the part of her brain that psychologist call the “lizard brain.”
The colloquial term “lizard brain,” refers to the brainstem, cerebellum, and basal ganglia, which are responsible for basic survival functions like breathing, balance, and primal instincts, and are often associated with the fight-or-flight response.
After Steven clarified to his daughter that there is not an actual lizard in her brain, he explained that she will probably feel like she is drowning about half-way through the swim test. However, she needs to ignore that feeling. Furthermore, ignore the lizard part of the brain that will tell her things that are not true. And, if she can successfully do those things, she just might make it all the way underwater and beat her two older brothers.
She did, in fact, achieve her goal and she made it across the pool underwater. After reaching the other side of the pool, she popped up out of the water and screamed out, “Man, that lizard is loud!”
As you probably already know, these two examples perfectly illustrate what is required in times of severe market volatility. All the signs, events, so-called experts around us are seemingly screaming to get out, run away, seek out the quick fix to make this pain stop.
Unfortunately, there is no quick fix. There is no information (at this time) to help us get through difficult times in the stock market. The things that work are illustrated in the examples above. Ignore the lizard! Stay calm and stick to what we know has worked in the past. I understand that strategy may sound simplistic and even juvenile to some reading this, but the problem is every other strategy is worse!
It reminds me of what Winston Churchill said about democracy. “…Indeed, it has been said that democracy is the worst form of Government except for all those other forms that have been tried…”
Here’s the good news: We don’t have to know the future to be successful. However, we do need a plan. If you know how the Navy SEAL trainees that came before you were successful at drownproofing, then you can apply the same lessons and strategy. It’s all you have. Even though the YouTube comment from Captain Obvious nailed it – drownproofing is probably easy if you don’t panic. It certainly must feel more like the first YouTube commenter that said “…last couple seconds made my anxiety go through the roof!”
In addition to developing a plan to be successful in a world full of unknowns, we actually need a little faith to go along with the plan. The kind of faith I’m talking about is the faith that it takes to turn down the volume and ignore the voice of the lizard brain. How do we know we won’t drown during the test? How do I know I can swim across the pool underwater and still be okay?
There are no guarantees in life, especially when it comes to finances. There is no guarantee that we’ll be here tomorrow. We don’t have guarantees but what we do have is data and experience from the past. The statistics and historical data show that most people lose more money in complex timing strategies aimed at perfectly avoiding the downturns in the markets versus the actual downturns themselves. Check out this article and this one too. And click here to visit PersonalFinanceClub.com to play the “Time the Market Game.”
I’m fortunate to have the opportunity to study historical market data on almost a daily basis. I also love studying human behavior. So, the faith that I’m talking about is not a blind faith. It’s the belief that this, too, shall pass. It’s the belief that we are a resilient and creative society. It’s the faith that companies like Apple, Amazon, Microsoft, Meta, and thousands of other companies like them will find a way to not only survive but thrive for decades to come. Furthermore, I benefit from their remarkable ingenuity, growth, and ability to adapt to diverse economic environments.
This time one month ago, I was writing for the April issue of Aero Crew News. That article was a bit tongue in cheek. Now it feels very serious. The most recent two days in the market were the worst since 2020. In last month’s article, I mentioned the importance of ignoring headlines and prognosticators. Now, it feels like the events in the markets are aligning with the headlines. This is the most difficult part of the investing journey, where it gets really hard to turn down the volume on our lizard brains.
I don’t know what the economy or stock market will be like by the time this article is published in a few weeks. Everything could be on the upswing, or we could be in a deeper market decline. We’re already in correction territory. As of this writing the S&P 500 is down more than ten percent. However, I think this is a great time to revisit investing and finance lessons learned from the past. The kind of lessons our grandparents taught us; save for a rainy day, spend within your means, plan for the future, be generous and grateful!
For those who have a well-thought-out plan and a strong “why” behind your savings and investing strategy, you will be fine. For those who may have been chasing high returns in the “Magnificent 7” and living on the razor’s edge of spending and debt, this could be a painful time. But it’s never too late to revisit lessons learned and develop a plan for success.
I’ll wrap up this article by sharing some of the thoughts I recorded during February, March and April of 2020. During the market and COVID-19 chaos I took notes on what it felt like, what we could be doing to help and just simple observations in general. It was certainly a fascinating time that can provide lessons learned for any market downturn if we can just remember them.
My Notes and Comments from February, March and April 2020
- “Years of stock market gains and past performance can evaporate in days, even hours…”
- “Southwest Airlines, LUV stock which had outperformed the S&P 500 for almost 15 years…up until this month. Jan/Feb 2020. Now it hasn’t even outperformed a government bond fund for 5 years.
- Investors are trying to capitalize on the new normal of using Zoom for business meetings, working from home and even schools. Unfortunately, they picked the wrong Zoom company to invest in:
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What are we learning now? Assuming you know something to be absolutely true could be…faulty planning. We always need to be prepared for multiple outcomes…
- “It gets better quickly…”
- “It gets better in “?” years…”
- How do we prepare for both of those simultaneously? Diversification, bonds, cash. Strong PERSONAL balance sheets…just like a business.
In 2020, it seemed like we all became a lot more introspective…for a minute.
Ask yourself questions:
- What would my life be like if I had unlimited amounts of money?
- What would my life be like if I had very little money?
- What REALLY brings joy, peace, and contentment
Why didn’t we sell early on in this crisis and go to cash? As each day progressed, we didn’t and still don’t know if it’s early or not. March 20, 2020… There’s no indication that it’s “early” in the stock market decline or “late.” Many days when thinking about what to do with investments the stock market was up 5% or even 10% in a single day.
I inserted this comment on April 10, 2020: so far, the S&P bottomed on March 23rd and is up about 20% since that day. Everyone is calling the bottom every time the market goes up. Simultaneously everyone is saying it WILL get much worse all the time
- Moving money to cash during a crisis actually creates more fear, stress and potentially regret. (Missed opportunities.)
- The psychology of holding cash is powerful…once you go to cash it’s hard to invest in the good times because the market is high, and it's hard to invest once the market goes lower because of fear.
- Now is the time to remember the feeling of wishing you had a stronger personal balance sheet. “Save for a rainy day.”
Hopefully, you found this article interesting and helpful. If you have any questions, contact us at 865-240-2292 or Charlie@leadingedgeplanning.com. Schedule a time to chat… Charlie’s cell/text–865-328-4969
Also, please tell us if we can help you on your journey to financial peace and prosperity! Click here to sign up for our newsletter or click here to schedule some time to chat about your circumstances in more detail. Also, check out our Pilot Money Guys podcast where we regularly discuss these types of financial topics along with some fun airline news updates and interesting guest interviews. Even the editor and founder of Aero Crew News – Craig Pieper!
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