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Coronavirus: Panic is bad, but overreaction is good

Ramit Sethi

How do you handle a crisis?

The IWT philosophy is to front-load the work, prepare for the best — and worst — and have a plan so we can thrive no matter what.

So what do you do?

When it comes to important things in life, this is my approach:
Panic is bad, but overreaction is good.

In important decisions, I believe in taking action, even overreacting.

Please read these coronavirus links, which I found fascinating and startling. Read these links to emphasize how serious this situation is. Some of these may be truly eye opening for you.

I thought, “Hey, I’m young and healthy. It wouldn’t be so bad for me.” This 48-year-old had coronavirus and says, “I was one inch from death.”

And yet…life goes on completely normally in NYC, which made me step back and say, WTF is going on? Before now, I never understood people who ignored warnings about tornadoes or floods and stayed in their houses while everyone around them evacuated. Now I do.

It’s been amazing to watch how nonchalant many of us are being about coronavirus. As a general rule, Americans are remarkably insular, never stopping to ask what’s happening in other countries and how we might learn from it. If we looked at other countries, we’d see what scenarios we might expect. We seem to take pride in how little anything affects us.

Our indifferent response reminds me of one of my favorite psychological studies ever.

Would you leave a room filling with thick smoke? Most people say “Of course!” but you might be surprised.

In a study by Latane and Darley, researchers filled a room with thick smoke. In one case, 75% of people left the room as you would expect. But in another case — when confederates in the room stayed seated — only 10% left.

It’s no surprise that if your friends and coworkers are shrugging coronavirus away, you will too. We take cues about reality from the people around us.

(Unfortunately, reality includes people with the intelligence of a peanut. I read comments from some Twitter crackpot who accused people of causing a “panic” and how “coronavirus is just like the flu.” As a general rule, I don’t take epidemiological advice from @CluelessDonkeyKong.)

Instead, look to experts, like the advice of one of the nation’s leading experts on infectious diseases, who says,

“People always say ‘The flu this, the flu that.’ The flu has a mortality of 0.1%. This has a mortality of 10 times that.”

So what can you do?

My advice on what to keep in mind right now

1.Your parents are at risk. Call them, tell them you love them, and ask them to work from home. They’ll resist (one common thing I’ve heard from my friends is how frustrating it is trying to convince parents to change their behavior). Insist. Tell them why you care so much and why it’s important they stay home.

2.Who do you take advice from? It’s one thing to be skeptical of the government (anyone see Chernobyl on HBO?). Then, in a predictable series of incompetent missteps, we realize…we were right to be skeptical.

I agree with these poll results — and you shouldn’t trust the government in its response. This administration lies about the weather, about spending, about taxes, about child separations. Of course it’s lying about a public health issue in an election year.

Don’t trust what non-specialists on Twitter are saying. Don’t trust your coworkers who are shrugging (“It’s just the flu!”). Don’t even trust me! Get educated yourself. And most importantly, plan for the worst and get comfortable overreacting. I know I am.

Here are the latest recommendations from the CDC, which is to minimize contact with everyone else.

3.Make a plan for what happens if (when) things get worse.

Last Friday, March 6th, I canceled my California events. (Thank you to the IWT readers for being so understanding.) Hours later, Stanford announced it was canceling all in-person classes, and San Francisco announced bans on large gatherings. I suspect we will see a change from voluntary quarantining to mandated very soon.

If you get infected, how will you get food? Who will take care of you? Now is the time to make plans.

4. Panic is bad, but overreaction is good. Don’t worry about looking stupid or wasting money. Spend more on supplies. Even if you end up donating them or throwing them away later, so what? One of the reasons you save is to be prepared for the worst. So prepare.

5. This is a good reminder to think hard about what kind of life you want to build. My company already works from home. On our last all-team call, I told them that I originally started IWT as a work-from-home business because I never wanted to go into an office with fluorescent lights. But during times like this, I’m especially thankful we can all work from home.

I know many others don’t have that option, especially low-wage workers in hospitality and service industries. I’m in groups with CEOs who are already making plans to cut staffing. They have to. Demand has dried up.

You and I have been hearing about the shift to “work from home” for over a decade. While some companies do it (like IWT), it’s still relatively rare. We’re already seeing coronavirus nudging more companies in the work-from-home direction. Sometimes tectonic shifts don’t happen by our choosing, they’re forced on us.

In a couple weeks, we’re releasing a new product, Earnable, on how to create a business where you can work from anywhere. Now this idea takes on even more importance.

6. Start thinking ahead with your money. One key difference between the rich and everyone else is that the rich plan ahead before they have to. If you’ve read my book, you know about emergency funds and investments and dollar-cost averaging.

Set aside 2 hours this weekend, cut expenses (you decide how much), and start shifting to an “emergency” protocol. Just like rationing food — you hope you don’t have to withstand the winter…but prepare nonetheless.

As for investing, I plan to keep following my own automated system. But if you have excess cash, there could be incredible bargains to be found.

7. If you believe that this could be a “new normal,” or even that we have a difficult few months ahead of us, I’d encourage you to accept what’s going on and act. Look ahead to countries that are ahead of us on the coronavirus curve. Panic is bad, but overreaction is good.

As I said, if you overreact, worst case, you end up with 50 extra cans of Heinz Baked Beans. If you underreact, worst case, you die. Easy decision.

I hope I’m wrong in overreacting. If I am, I’ll accept it. I have the freedom to choose the life I want.

But whatever you decide, accept what’s going on and make an active decision. In life, don’t wait for others to make important decisions for you. Nobody’s coming to save you.

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7 Comments

 
  1. avatar
    Dan

    Since when is a 48-year-old obese asthmatic considered “young and healthy”?

    • avatar
      Mary

      Listen to your local authorities. They have a better handle of what’s going on in their states and communities. Find out where to go for testing if you develop symptoms. Don’t just show up at the clinic or ER. Even if your symptoms are mild and cold like get tested. You could spread it to someone who won’t have a mild case. The only ways communities can know the extent of spread is through testing. Stay home if directed to do so.

    • avatar
      Aaron Midland

      Obese? I can't read the NYT article because of the paywall, but the article I read about him said he's an asthmatic but runs every day. I don't know many obese people who run every day.

  2. avatar
    Andrew Chapman

    "Overreacting" is a subjective term of course — but overreacting is actually bad when it means you buy all of the 8 cans of beans left on the shelf. Just saw a guy do this at Target the other day. He probably didn't consider it "panic" because he only took 8 cans. But people are doing this to the point that others have nothing, instead of all of us having a little less.

    Unless you're taking the last unit of product (and then, only if you *need* to), be kind and courteous and *humane* and leave at least half for other people.

    And toilet paper… seriously folks. How much do you think you use? Remember, you don't need 400 rolls. Worst-case scenario, you have rags that you can use and wash. Our great-great-grandparents did just fine this way.

    • avatar
      Mary

      I agree with Andrew. Take only what you think you will need for 2 wks. We need to prepare for supply chain disruptions even domestically, so some items might not be restocked for awhile. Yes this might be a good time to put aside our self centeredness and think about others

  3. avatar
    Vik

    Hey Ramit

    On your comment "As for investing, I plan to keep following my own automated system. But if you have excess cash, there could be incredible bargains to be found."

    I have read your book. It clearly states two things
    1. Do not buy stocks. Invest in Target/Index funds, be diversified.
    2. Do not DCA. It fails 2/3 times.

    I am a fan and convinced. But at times like these, I get a bit confused. Does point 2, holds still? See, the probability game works when times are good and we do not know what is going to happen tomorrow. But right now, there is a special situation – we "know" the probability of going down is more. Would you change your stance in DCA at this time?

    This gives me another idea – the DCA and the book covers all scenarios, but one. You have loads of Cash and the Market is going down. The good scenario.

    Could you please shed some light and help a poor soul? With loads I mean not a whole lot to retire but enough to be scared to put into the Market.

    Please help !

  4. avatar
    Wei Long

    Been following IWT and Ramit's work for some time now. I've mostly found his perspectives on money, business and life to be worth at least considering. However I personally think this is a slight misstep here.

    "Don’t worry about looking stupid or wasting money. Spend more on supplies. Even if you end up donating them or throwing them away later, so what? (…) As I said, if you overreact, worst case, you end up with 50 extra cans of Heinz Baked Beans. If you underreact, worst case, you die. Easy decision." – I understand that there's a dose of irreverence here but remaining or moving to become mindful about how and what we consume is of worthwhile consideration.

    Yes be self sufficient for ourselves and our families, yes don't be complacent, but resist the urge of acting from a place of fear. Hoarding can place a strain on supplies at time when supply chains are disrupted, and deny those who need it or others from a chance to raise their own levels of self sufficiency. It also breeds an air of mistrust that arguably aggravates the situation further.

    As Ramit puts it "I hope I’m wrong in overreacting. If I am, I’ll accept it. I have the freedom to choose the life I want." This comment is not meant to didactic or invalidate one response strategy over another. We are free to make our choices. To do what we think is best. Consider acting in alignment to your highest self. To take a moment to reflect, be informed and consider the possible implications of our choices.