There are two examples of the Reticular Activating System I’d like to share:
I once knew a mom with a newborn. She propped her baby up on the couch and dozed off. The TV was on, there were cars honking on the busy streets below her apartment. However, she was able to hear or be aware of the slightest movement her daughter was making. And even in her drowsy sleep deprived state, she lept up and caught her baby before she could roll off the couch.
Have you ever noticed how your friend buys a new car, say a Ford Bronco, you become more aware of Ford Broncos. After hearing him talk about it for hours, you notice Ford Broncos everywhere you go in the next few weeks. You don’t even really care it’s just part of your subconscious.
Both of these examples explain the Reticular Activating System. It’s a filter that your brain uses to find what’s important and exclude what is extraneous. If it didn’t work, you’d notice far too much inputs to your senses and become quickly overwhelmed. However, if it works too well you may obsess and fixate on the wrong things. It’s a good think our brain does but it needs to be trained and harnessed for optimum effect.
Well, I’d hold out that we are in danger of falling prey to the Recession Activating System. That’s not a real thing, I just made it up. But what I’m trying to say is that with all the news of two negative quarters of GDP, high prices in essential consumer goods, rising interest rates and slowing business activity, it’s easy to become obsessed and fixated on RECESSION!
That would be a mistake. This is a life lesson but also a financial planning and investing lesson as well. Let me elaborate.
From an investment standpoint, if you are putting money into the market systematically as you would in a 401k plan, down markets are a great thing. The stock market is on sale and you have an opportunity to buy more quality for less. If you were buying a washer and dryer, you’d be delighted with the price drop. Well if you are more than 5 years from retirement, this could be the moment that allows you to stock up on quality assets if you are patient and persistent. So train your recession activating system to see the opportunity.
If you are already retired, these can be trying times. However, you’ve seen this before. In 2001 and 2008 we saw recessions and market pullbacks. Your plan has factored this in. Patience and consistency pays off a time like this. Better times will come and you’ll be rewarded for having a plan and sticking with it.
When it comes to your life, this also another great opportunity. At work, it’s your time to shine. Your business can take more market share by simply surviving. New business ideas will be born of this new necessity and new opportunities are right around the corner. 1987 gave way to the roaring 90s. 2001 gave way to a boom in real estate and precious metals. 2008 turned into 2009 and the longest bull market in recent memory. Be ready, be aware.
Stop activating a recession mindset. It’s a self-fulfilling prophecy. A year ago I was telling you to be fearful. Now in this known recession start getting optimistic and hopeful. Be on the lookout for the next best chapter of your investment, retirement and work life.