Resilience and Finance, learning from investing

These last weeks have been interesting in the financial market. As I write this article, Ethereum and Bitcoin are on a downfall and the stock market has not recovered yet. This creates panic in the investors and some of them sell, falling in to the category of paper hands. Others, who have know what a fall is, hold, or better said, HODL to their asset knowing that things will be better in the future falling into the category of diamond hands.

Resilience and finance go hand in hand, and why not write about how we can learn to be resilient through finance. First, let’s start with the basic. The market is based on a cycle, hence the term cycle theory. The market goes up, and the market goes down. Same as in life, sometimes we are on a roll and sometimes we hurt ourselves even in our sleep. This teaches us to savor de moments of happiness and joy and to know that the moments of difficult just feel away. Sometimes you just have to HODL on to the complicated moments in life, because life, as the market, gets better. The problem is trying to see this in the middle of the tornado. Which leads me to the second step.

When you are on a downward trend, focus on what you have, not on what you have lost. In finance, there is always a recommendation that we should not invest that which we do not own, or better yet, that which will compromise our future investments. For this we have to keep our savings account apart from our investments account. In life, the analogy is that the savings account is what we keep returning to when we into the downward trend. Our family, our friends, our health and our perspective. The investments account is our learning, prospective, our network and the future. When things enter into a low cycle, we should grasp to our savings, which literally will save our life. Never forget what is important, and in difficult moments, those who love us is all that we have. Let’s remind ourselves to never loose that.

The third step of investment is to understand that HODLing on is about faith and confidence. Fear is based on the uncertain. The uncertain obviously sells. But we shouldn’t fear the uncertainty because everything is uncertain in our lives. Philosophy works around this premise in which we are not able to predict the future but we are able to predict our behavior. We are the only constant in our future, the environment is not. Same as in investment, we can fear what will happen but when we chose to invest we knew that there were going to be upward and downward trends. The same with life, there are moments of drought and there are moments of abundance.

What should we do? HODL with the same attitude that made you happy when the market was up. HODL because you believe in the asset, or because you really like the stock. HODL because life is like this, you can laugh at your losses because you enjoy your gains. HODL because the investment game is the same as life, it is always in the long run. So as Seneca said, do not suffer in imagination. When times get really tough, understand that you will survive because you are the constant. That is what resilience is all about, believe that you have brought yourself with success during all the time that you have been alive. Why hesitate now?

Sincerely,

Mauricio