The last few weeks has seen people, me included, lose a lot of cash. Bitcoin has halved in value, causing huge knock-on effects to the rest of the crypto market.
I’ve watched my friends lose house deposits, life savings and, not surprisingly, their cool. Apart from the first few hours, I’ve surprisingly managed to stay relatively chill about losing half my net-worth overnight.
The reason I can stay chill is simple – I view the situation as an event, not a crisis.
I’ve made the mistake before of viewing bad situations as a crisis. You feel out of control. You feel like the world is falling in around you. It’s not a pleasant place to be. An external event shakes you to your core, you start questioning your beliefs, values, and character.
But if you view a bad situation as an event, it’s just another external happening. It’s the difference between watching someone get run over by a car in a film, and getting run over by a car. Rather than enter a downward spiral of despair and self-pity, you see the situation for what it is – just an event, that in the grand scheme of life, isn’t the be-all and end-all.
I’m not going to attribute saintly mindfulness (although this may help) as the cause for being able to view situations this way, instead I think it comes down to a few practical actions and mindsets, which I’ll share in this article.
In my experience, ‘crisis mentality' can often stem from overemphasising the importance of the outcome of a particular situation or event. Take the crypto crash, if your only motivation for investing in cryptocurrencies was to hit a certain target number, you are going to be overly emotional if an event puts the achievement of that target in jeopardy.
On the other hand, if you are more focused on the process, seeing crypto investing as an opportunity to educate yourself on the fascinating Web 3.0 space, and improve your knowledge about wealth generation, then seeing your portfolio tank is not going to have anywhere near the same level of impact, as regardless of the outcome, you have gained great benefits simply by being involved in the process.
Of course, this isn’t just applicable to financial endeavours, if you break up with your partner, or fall out with a close friend, it can be too easy to just focus on the outcome. ‘I wanted to spend my life with that person’ or whatever narrative you tell yourself. Instead, getting into the mindset, of reflecting on the good times you shared together, or the lessons you’ve learned is going to lend itself to you viewing a certain event as an event, not a crisis.
If you have a farm with 10 chickens and one of them gets taken by the fox, you’ll probably not view this as a crisis. On the other hands, if you have only one cow and it spontaneously keels over, you may be more inclined to see it as a crisis.
After every market crash, workers in the financial sector commit suicide at much higher-than-average rates. The problem – they are not diversified. When they get let go, they don’t just lose their jobs, they lose everything. Their social network, their purpose, their status. Every single element that contributes and kind of meaning to their life is taken away from them. What to live for then?
This is the problem with investing all your energy into your career and work life, especially if you operate in a highly specialised industry or job role, you are putting yourself in a very fragile position, one black swan event and everything could be gone.
You see this problem a lot with old men. The statistics on the number of elderly gents that die within a year of their wife dying are shocking. Meanwhile, women tend to keep going a lot longer. The hypothesis for this phenomenon is that (traditionally, but hopefully this is changing) women are much better at maintaining social connections and roles in society than men are, so when a man’s wife dies he doesn’t really have much to live for, he’s not diversified in his sources of meaning. Women, on the other hand, have other areas of their life that provide meaning, so they keep going.
So yeah, take a look at your life, if a vast proportion of your meaning is derived from one source, whether that be a job, person, or pursuit, you may be at a much higher risk of viewing an event as a crisis.
If you get shook by an event fucking up your plans, it might be that you don’t believe in the fundamentals. The most obvious example for me is investing. As I take the time to do my due diligence on a company, before I invest, I can rest pretty easy if it drops half its value, providing nothing has changed in the underlying fundamentals. This crypto crash hasn’t occurred because blockchain has stopped working, or the problems that crypto sets out to solve have been fixed. It’s crashed because investor sentiment has changed.
You see this a lot with entrepreneurship or any profession with a high degree of uncertainty. Great entrepreneurs experience a setback, perhaps slightly update their model of the world, but ultimately stick true to their vision. They believe in the fundamentals.
Likewise, I had a mate at uni who knew he wanted to become a pro rugby player. He knew he was good, he knew he had the skills, and it was only a matter of time before this dream became a reality. He went through years playing for division teams, probably teams he thought were beneath his ability, but he didn’t view this as a setback, it was just part of the process, and he fundamentally had great faith in his ability. He ended up playing premiership rugby.
I guess the caveat to this principle is not to just mindlessly operate with the exact same vision and belief systems. Sometimes you are just wrong. The skill is understanding when you are correct, and just need to take more time, and when you are full of shit and need to update your beliefs on the world. Trust me, this can be a bitter pill to swallow.
I’ll keep this one short because it’s quite simple. You never know whether an event is good or bad at the moment it happens. Just look back into your life at all the events, that at the time you may have considered ‘bad’. Whether this is a business or relationship failing, getting sick, losing money, whatever it is, you can probably see that this event led to positives, that you couldn’t see at the time. Because of this I just don’t see it helpful to label and situation as ‘good’ or ‘bad’ the moment it happens, after a few years, you can look back and make that call.
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