With week 3 of the national lockdown almost behind us, this has been another week of extraordinary developments and distressing statistics.
Many of us still feel as anxious as we were three weeks ago, because what’s happening is still very much out of our hands. This uncertainty can generate panic, and panic can affect our decision making.
In the article ‘Long Toilet Paper / Short Equities – Why We Panic Buy and Sell’ the author Joe Wiggins explains this when says: “Panic can be caused by the assumption that there is information in the behaviour of others, and the greater the number of people engaging in certain activity, the more we believe that they possess knowledge that we do not.”
This explains why in some local areas, toilet roll might still be in short supply, but in others, it might be pasta and tinned tomatoes. As soon as a critical number of people start panic-buying a certain item, so does everyone, because they assume others must know something they don’t!
Panic also makes our time horizons contract
This can be critical for investors.
Wiggins says: “In the midst of panic our concern becomes singularly focused on what is happening right now; we are gripped by the fears of today and abandon any thought of the future.”
Here at Sutherland Independent, we would advise against making any knee-jerk decisions and encourage you to try and remain focused, however hard that might be. It’s worth remembering that the viewpoint of any financial plan is always long-term.
If we reviewed your plan in January for example, we’d have been looking at things in terms of the next 5, 10 or 15 years. That doesn’t change, despite the present circumstances.
However, the plan is flexible and using an everyday analogy, can take many routes. Even if we adjust it, the destination remains. One ‘route’ might mean travelling by ‘motorway’, another might mean travelling along a country or ‘B’ road. Both routes will get you to where you want to be, but one may include more bends or bumps than the other.
I hope this helps to reassure you at this difficult time.
If you’d like to chat about this in more detail, please get in touch.