Throughout the coronavirus pandemic, my mindset has transitioned to one of short-term thinking.
I think this has been shared by many people who have been through, or have experienced, mental covid. Seeing people panic buy goods in supermarkets is only one of many reasons why I believe this to be the case. It makes sense, because in a crisis we are all trying to figure out what to do to protect ourselves, our loved ones, and our assets.
I have realized though that it is during these times where long-term thinking matters just as much, if not more, than usual. Sure, some degree of short-term thinking may be warranted by what is going on -- stocking up on more food than usual may be helpful -- but there is a limit to how useful short-term thinking can be.
Consider this: during these times, it would be incredibly easy to cash out of your investment portfolio. If you cashed out of your shares yesterday, you would have likely taken a big hit. Every good financial adviser knows to tell their clients not to sell in a crisis -- investing is a long-term game -- but it’s different when you see that you are losing money every day.
When I started to realize how big coronavirus was, I started to make a number of decisions that focused on the short-term. Then I remembered that there is still a long-term that we need to think about. This crisis will be over one day, and the last thing I want is for myself to be under undue stress as society resolves the coronavirus pandemic.
As a result, I have decided that during these times it is as important as ever for me to stick to my values and to continue to invest in my habits as normal. I will make decisions with compounding effects -- like choosing to write every day -- because doing so will provide me with a lot of leverage going forward.
When we emerge from this crisis, I want to be able to look back and say “I used my time productively.” I also want to be able to start off on a good footing when we return to normal. For me, this means that I am going to keep writing as normal, keep investing in habits, and double down on my long-term thinking. I may not be able to do everything I used to be able to do -- like travel -- but I can still keep investing in many of my long-term projects.
We default to short-term thinking in crises because it makes us feel more comfortable. In a world where everything is changing, knowing that we are responding gives us some semblance of peace. We can say “I did something today to protect myself” and that feels good. But although it may feel good in the moment, that decision may impact our future.
If you cashed out of your investments today, you may feel good knowing that you are no longer subject to the market volatility going on, but how will you feel in ten years when assets should have recovered? How much money will you have lost because you sold when stocks were at an incredibly low point? Or how would you feel if you bought a year’s worth of food only to realize this crisis is over in six months?
Uncertainty makes us lose sight of the long-term. It’s difficult to acknowledge that there is still a year -- a decade, a century -- ahead of you, but the fact is that the future does exist, just like it did yesterday, and the day before.
Long-term thinking is incredibly important in crises -- it makes sure that your future self is protected. The worst thing you can do is default to short-term decision-making in an effort to feel productive.