The Challenge of Fear

Change is not bad, it is just change.


When I was young, whites and blacks went to separate schools. The summer before we integrated the school system, emotions ran high. The KKK burned a cross on the courthouse square. African Americans marched peacefully in the streets. Fear was rampant and the police imposed a 9PM city wide curfew.


The first day of school came. As we assembled, everyone was a bit nervous. The bell rang and we walked in the door. Life was different but it was not over. A new order was born and this change completed its cycle. Old order, change, new order, which becomes old order, change, new order, which becomes old order, change. It is natural cycle.


We have no more reason to fear change than we do the old order or the current order. Nor does holding onto the fear of change assist us in any way in living peaceful, joyful lives.


Over the last few months, financial institutions we have long considered mainstays in America have disappeared. We are experiencing a tsunami of change. Out of change comes new order. This is not a possibility. This is the natural law of the universe.


It is easy to be scared by the financial news of the day. As an investor, fear is not your friend. Many investors will go over the waterfall of fear and fall into panic, sell their stocks and move into bonds or cash.


All great investors have two things in common. The first is discipline. Successful investors have an investment philosophy based on solid research and experience. They stay out of the emotion of the day on Wall Street and execute on their philosophy.


The second thing great investors have in common is that they avoid economic forecasting. In a recent CNBC interview, Warren Buffet, the world’s richest man, said, “I have never made any money on economic forecasting.” It isn’t about knowing when the economy is at the bottom. It is about staying the course and following your discipline.


Remember, if your asset allocation is appropriate for you, what is happening on a daily basis on Wall Street is not a game changer. Equity markets are for long term investors. Even if you are in your 60’s, your investment horizon is long term based on today’s life expectancies.


This is a wakeup call. On the national level, now is the time to consider your vote, write your Congressperson, and make your voice heard.


It is folly to think we do not need regulation. Until we are willing to hold the higher good above our own self interest, we will continue to need smart, sane regulation.


Recessions aren’t fun, but they are incredible opportunities for self reflection, clarity and growth. Wake up to your own way of making financial decisions. Wake up to your own use of debt. Of buying things you don’t really need with money you don’t really have. Wake up to your own financial plan.


Practice non attachment to those things you cannot control. Focus instead on what you can control your personal choices. Do not expend needless worry on those things you cannot control. Continuing to do so adds to the energy of holding these patterns in place.


If you have been practicing good financial discipline, living within your means, using credit wisely, and investing according to your personal goals, continue this practice.



Be clear on your short term cash flow needs. Review your plan with your advisor.


So what are the practical steps to take now?


1. Take inventory of your emotional body. If your emotional body is not in alignment with your data body, your emotional body will win. We are not really rational beings. Most of our decisions are made from our unconscious habits. This is why financial education alone, that is more data, does not work. The unconscious habits of the person is the mirror who is blocking your personal prosperity. The willingness to become the observer of your emotions creates a solid foundation for change.


2. With your observer in place, keep a long term view. Step back and see the historical perspective on equity markets.


3. Develop and stick to a budget. If you don’t know how to budget, get help. Spend time considering your wants and needs, and carefully separate the two. Notice if spending is a way of satisfying an emotional need. If so, you will need to find alternatives ways to satisfy that need or your budget will fail.


4. Discover your personal goals. What do you really want? What is important to you? What legacy are you called to leave? What are you passionate about?


5. Build a financial plan around your goals. Don’t wait until you have money to create a plan, create a plan so you will have money. Plan your work and work your plan. You interact with money every day. It is the tool you use to acquire the things you want. It is what you exchange your life energy for every day at work. Give it the importance it deserves in your life.


6. If you are not a do-it-yourself financial person, get quality advice. There are plenty of local, fee only financial advisors that can assist you in developing a personal financial plan for your life.


E mail me at Mackey@CultivatingProsperity.com with questions or concerns.