Feeling unsure of how to respond in times like these can lead to panicky decisions while we seek control in an out of control world. In this blog, I respond to a CNBC article about the panic-shopping and panic-investing we are witnessing. I’ll go over the processes underlying our behavior and how you can help yourself cope.
In this article published by CNBC, the author discusses how panic leads to problematic decisions like hoarding and divesting from the stock market. The author found out that the panic sweeping the nation in grocery stores and the stock market is a result of human behavior during panic. In times of panic, we seek to preserve ourselves by hoarding necessities and pulling our cash out of investments. If the behavior seems primitive, it’s because it is. We are using a brain that dates back about 150,000 years and trying to use it to cope and decide about markets that are only about 100 years old and a society that is less than 250 years old. It is worsened by the fact that fear can be contagious, so if you see someone piling up canned goods, it sends off fear signals in your brain that you may be the one without if you don’t act quickly. According to the article, it is best to sit down and take stock of your emotions and separate from your decision-making by talking to experts, such as a financial planner. They may be able to provide rationality or have experience in sharp economic downturns.
It’s All Normal to Feel
You’ve probably felt your heart start racing or palms sweating as you started to look for your car keys and reusable grocery bags in a last ditch effort to get what you can at the grocery. Maybe you’ve thought of cashing out of the stock market or pulling cash out of the bank. It’s all normal to feel but the big problem is thinking we’ve made the best decision when to pull out cash or hoard toilet paper.
As the article mentions, our brains are an old system that dates back about 150,000 years ago. If you can imagine a primitive human staring in awe, mouth agape, at a TV displaying cable news of the COVID-19 crisis (let’s assume the human speaks English), it is easy to also imagine that person frantically grabbing at necessities, pushing people over to get to them, and grunting to intimidate others. Fear is contagious and no one wants to be the one without enough supplies if circumstances become so dire.
When we acknowledge that we have the same brain, the panicky response of the masses seems more understandable.
Most people pulling money out of the bank or stock market are focusing on preserving what they have. This emotional reaction has the power to override an established financial plan and cause people to “get out.” Imagine our friend, the primitive human, with a pile of resources, seeing the panic on TV, and attempting to protect his pile – not too different from us, again.
Stockpiling is a legitimate coping response that will probably result in reducing your stress but only if done responsibly.
Ineffective Coping Makes Things Worse
Buying enough canned goods for a couple of weeks of self-quarantine is realistic, but racking up a credit card bill you cannot afford for food and toilet paper you cannot store is a poor choice that will lead to more stress and worry. Standing in line for hours at Costco talking to other people who are reacting to panic is likely increase your stress, too. Also, hoarding means there will be less for others, especially the vulnerable that aren’t able to travel to the store or afford to buy in large quantities.
6 Things You Can Do to Cope
- Talk to others. Take time to talk to others via FaceTime and gain other perspectives and socialize without leaving your house.
- Turn off news notifications on your phone. You have plenty of other things you can do on there. Play a game or do something more active, such as drawing or journaling.
- Limit watching the news on TV. Maybe you only watch the evening local news broadcast and leave it at that. Instead, watch movies or play video games.
- Visit the grocery at off-peak times. If you must go, go when fewer people will be there to reduce your panicky feelings. Go with a list and only buy what you need. Essentials will remain available, even in a major shutdown (i.e.: Spain)
- Talk to a therapist. You knew I would suggest it, but if you’re feeling overwhelmed we are here. I can’t make it all go away or run your errands but I can help you gain perspective and work on symptom management in the meantime.
- Explore your state’s COVID-19 website. For example, California (where I practice) has a website that helps folks understand how the government is responding and protecting your future. For those worried about their finances, the site includes details about paid leave and short-term disability options that can help calm financial worries.
Put simply, do not stimulate yourself with stressful images and words. It is one thing to be informed, it is another to be overwhelmed and inundated in a way our 150,000 year-old brains aren’t great at handling.
When to Seek Professional Help
Give the tips above a try and if you’re noticing yourself struggling to cope effectively it might be a good time to reach out to a therapist. Connecting with another person that is nonjudgmental is an opportunity to reflect and honestly analyze your thoughts, feelings, and behaviors.
Protecting the future for you and yours is a common reason people invest, so times like this feel existential. It’s important to check with your financial advisor about how to best stick to your plan or hire a financial planner to help develop a plan that includes contingencies for times like these. Writing down the things you are anxious about and seeing if there is a simple solution is useful step to take.