The Stoic Approach to Market Crashes

Key Takeaways

• Control: You control your behavior, not the market. Focus on what you can control.
• Negative Visualization: Mentally rehearsing a 50% crash vaccinates you against panic when it happens.
• Amor Fati: Love your fate. A market crash is not a disaster; it is an opportunity to buy assets on sale.
• The Long View: This too shall pass.

Introduction

"You have power over your mind - not outside events. Realize this, and you will find strength." — Marcus Aurelius

The stock market is an "outside event." You cannot control it. You cannot predict it. You can only control your reaction to it. Investing is 10% math and 90% temperament. The reason most people fail isn't because they picked the wrong fund; it's because they panic-sold at the bottom and bought back in at the top.

Deep Dive: The Art of Not Freaking Out

The Dichotomy of Control

In investing, there are two lists:

Things You Control:

• Your Savings Rate.
• Your Asset Allocation.
• Your Investment Fees.
• Your Own Emotions.

Things You Don't Control:

• Interest Rates.
• GDP Growth.
• What the Federal Reserve does.
• The Daily Price of Amazon.

Most investors spend 90% of their energy worrying about list #2, and ignore list #1. The Stoic Investor flips this. If it's not on List #1, it doesn't deserve your energy.

Premeditatio Malorum (Negative Visualization)

Stoics practiced visualizing the worst-case scenario so it wouldn't hurt them when it happened.

• Exercise: Close your eyes. Imagine your portfolio drops 50% tomorrow. $100k becomes $50k.
• Reaction: Would you starve? No. Would you lose your family? No. Would you still own the same number of shares? Yes.

If you mentally accept the crash before it happens, you won't panic sell when it actually arrives. You will have already "lived" it.

Amor Fati (Love Fate)

Love what happens. Marketing crashing? Good. It means stocks are on sale. I can buy more shares for the same money. This reframing turns a "crisis" into an "opportunity." Warren Buffett calls this being greedy when others are fearful. Stoics call it loving your destiny.

Summary

The market is a pendulum swinging between optimism and pessimism. The Stoic stands still at the center. Do not be the leaf blown by the wind; be the rock the wind breaks against.