Fear and the future of your investments


I was wrapped up in other projects today and didn't check the ticker until this afternoon. As I saw the plummeting Dow, a bolt of fear shot up my spine. I suspect I'm not alone.

And that's a big problem. Fear is a useful emotion, the trigger for adrenaline, the fight or flight instinct, when our lives are in peril. In the financial realm, however, fear serves to cloud our judgment, and can be destructive to our financial wellbeing.

It is fear that traps some people in stampedes (as recently demonstrated in India) and drives others to the bottle or other self-destructive behaviors. Fear leads us to hold onto stocks longer than we should, and fear causes us to dump them at foolishly low prices. Fear drives us to buy gold at the top, sell at the bottom.

Today, the market is that stampede, with investors cultivated to fear by month after month of broken promises. What can a fearful investor do in the midst of a stampede?

I plan on taking a safe seat out of the maelstrom, comforted by the knowledge that every economy in the world stands to suffer if ours collapses. With eight billion people pulling for our recovery, I don't believe those currently on stampede reflect an accurate picture of our economy. I think they're just scared people, deluded by adrenaline and, in their panic, liable to cost themselves hugely.

In Dune, Frank Herbert wrote this litany of fear, an incantation used to overcome fear: you might find it useful today.
"I must not fear.
Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing.
Only I will remain."