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Fear

Sigma Investment Counselors

May 7, 2021

Anxiety is a normal human emotion, until it goes to extremes and leads to the potential of irrational behavior.

“The only thing we have to fear is fear itself”.  This was President Roosevelt’s (FDR) response to the public’s fears during the Great Depression and reflected FDR’s conviction that the U.S. would emerge as a stronger, more prosperous nation than ever before.  FDR had it right, fear can lead to worse outcomes than whatever it was that ignited the fear.

Consider, the American Psychiatric Association recently recognized climate change as a growing threat to mental health.  Eco-anxiety is being recognized as a natural response to a threat.  For example, people have expressed a number of climate related concerns, including questioning the wisdom of having children in an apocalyptic, climate-changed world.  Could this be an overreaction to a long term problem that is yet to be fully understood?

Investors should be wary of becoming influenced by proponents of worst case scenarios and recognize that worst case hyperbole seldom proves to reflect the eventual outcome. Accordingly, portfolio decisions should be based on assessing probabilities and how they might affect personal financial objectives.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®

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