The Five Stages of Being Lost

My friend Nick Maggiulli has a post up about the parallels between lost in the Amazon and lost in the markets. It hits on so many levels…

Laurence Gonzales in his groundbreaking book Deep Survival describes the five stages of becoming lost and how they lead to a breakdown in logic. I have included Gonzales’ description of the five stages along with some of my investor related commentary in parentheses:

1. Denial of being lost. You press onward in an attempt to make your mental map fit what you see (“This stock can’t go down. I should buy more.”)
2. Urgency as you realize that you are lost and start to act frantically (“Perfect. It’s at an ultra discount now. Let’s sell some of my winners so I can take advantage of this bargain.”)
3. Bargaining as you form a strategy that tries to get you back on track (“If I can buy even more I can make up for my losses when it bounces back.”)
4. Depression as your strategy in part 3 fails to resolve the conflict (“What am I going to do? I already liquidated my 401k.”)
5. Acceptance that you are lost and must form a new mental map (“I should talk to a financial advisor.”)

Josh here – It is not hopeless. Nick’s message is a positive one: “If anything, knowing you are lost is freeing, because it allows you to focus on the part of your investment strategy that you can control.”

Don’t miss this one.

Source:

In the Land of the Lost (Of Dollars and Data)