How to Survive a Bear-ish Market, or Life.
The science and co-existing art of uncertainty.
If I had to pick one major lesson I’ve learnt so far this year, it’s this: the certainty of uncertainty.
How you can have a detailed 5-year plan in a perfect Google Doc file, and life will just go ahead to do its own thing.
It can feel like drowning in the ocean of life, clinging desperately to a reliable raft.
Known for its inherent volatility, this year in crypto was particularly chaotic: from the fluctuating prices of various cryptocurrencies (and downright crash of some) to the FTX debacle.
2022 #CryptoWrapped would say this: 496080 minutes of uncertainty. Personality: The Speculative.
How can we manage economic uncertainty, especially with a projected recession in the coming year?
Better yet, perhaps this question can be extended to life in general.
Let’s dig in.
Understanding our Discomfort with the Unknown
“Nothing is certain or proved beyond all doubt.” - Richard Feynman
In 2016, a thought-provoking study was conducted.
A cohort of volunteers was told they would be receiving a painful electric shock. But there was a caveat: only some were told it would happen for certain. The others were told there was a 50% chance it might not happen.
What they discovered was that the volunteers who knew they’d definitely receive a painful electric shock felt calmer and were measurably less agitated.
It goes to show that even if things will go wrong, we’d rather know: it feels like half the battle is already won.
There’s something unnerving about uncertainty.
But rightfully so.
From what we know of modern neuroscience, the amygdala (an almond-shaped area in the brain) has been studied for its key role in associative fear conditioning in animals and humans.
See, uncertainty is interpreted as a danger to our minds because when we don’t know what to expect, how do we protect ourselves? And the very premise of continued human existence is based on survival.
This is why it's still difficult and painful to accept, even when we know that life can be unpredictable.
But all hope isn’t lost.
How to Stay Sane in Uncertain Times
What’s a bear market?
Simply put, a bear market is a period of prolonged and volatile decline in the price of nearly all assets. This means that losses can be made. Because in more technical terms, a bear market is when asset prices fall 20% or more.
Also known as a crypto winter, it’s reminiscent of our literal current season.
With winter comes extreme cold and extended periods of darkness ( shorter days, longer nights). But for some, an extreme form of Seasonal Affective Disorder can also be experienced: the occurrence of depressive symptoms during seasons because of lesser sunlight.
Perhaps, we can do a few things to lessen that pain, however.
I reached out to a friend of mine, who is a Consultant Psychiatrist and founder of Asido Foundation, a not-for-profit mental health organisation, to share some tips to help save whatever’s left of our collective mental health. But it turns out these can also be applied to our financial well-being in general.
1. Realise that 99% of your worries won’t happen
As someone prone to worrying, this is one lesson I often struggle with. Easier said than done, being selective about what to focus on mentally (which worry simply is, although negative) is often in our control.
Here’s what Dr Abdulmalik advises:
“Yes, take personal precautions but know that most of your worries are unfounded.”
So what does he suggest instead?
Investing in personal development.
There’s something about looking outward instead of fixating on one’s self. A practical example is ice therapy for anxiety: a method using ice cubes or an ice pack to help stay calm during a panic/anxiety attack. It involves holding a cold compress to your chest, holding ice cubes in your hands, eating ice or rubbing ice cubes along your face and arms. This works because it jars your thoughts away from the internal machinations of your mind.
Take this underlying concept and multiply it with your grander life. It’s not about distraction, it’s about choosing what rather focus your attention on.
Invest in yourself; that’s one investment that’ll never be a waste or lose value.
2. Take life a day at a time
Perhaps the most profound mindset I’ve imbibed this year, staying grounded as each day comes, has been life-changing.
“Live in the moment” and “don’t worry about what you can’t control” may read like clichés, but they’re true for a reason.
We need to make the best of the time we’ve been given because it’ll all end eventually someday. We can’t fully control the outcome of a future we’re yet to see. However, what we can do is our present reality.
3. Be part of a community
He confirms a theory that’s been playing in my head for a bit: isolation is its own form of hell.
In these times, more than ever, it’s key to be intentional about staying in touch with friends and family. Especially for anyone who has recently made some losses.
Build your social support system. After all, we all need one another.
Resilience is what keeps our humanity going, the opposite of our kryptonite. (Sidebar: yes, even we MCU fans can dabble into DC lingo once in a while).
“If uncertainty is unacceptable to you, it turns into fear. If it is perfectly acceptable, it turns into increased aliveness, alertness, and creativity.” — Eckhart Tolle
Unpredictability can be both exciting and challenging, but it’s up to us to navigate this general uncertainty of life.
As we wrap up the year, here’s a timely reminder that you’ve done the best you knew to do.