Practical Lessons for Your Financial Life (Collection)

Crises Give You a Chance to Gain Objectivity

One benefit of a crisis is it gives you the chance to gain objectivity. Often, that level of objectivity is missing from the investor’s mindset. In good times investors become emotionally involved with their investments. When markets decline, they can even become more committed to the item that hurts them the most. In a crisis, you take on a new perspective. Enlightened, you can look at your investments with fresh eyes, facing facts and examining choices, risks, and results.

One way of doing this is to assign your own grading system to your investments. For example, an “A” investment is 100% reliable in the long term, even if its current market value, in your mind, is temporarily down. This investment ...