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I hadn't planned on going swimming in the Atlantic fully clothed. But I sensed imminent disaster. A flock of twelve-year old boys, led by my boogie-board-loving son Lucas, would soon be headed for the west coast of Africa on a riptide if they didn't turn back. The Brazilian life guards sprinting behind me confirmed that I wasn't some crazy gringa either - they gave the boys an earful and fun was contained to a narrow corridor much closer to shore.
Growing up on the Hawaiian islands, I've lived through hurricanes, earthquakes, volcanic eruptions, and many reports of drownings by those who were unfamiliar with local conditions and overwhelmed by the sea.
As an adult, I fished out a toddler who rode his tricycle into a swimming pool and gave the Heimlich maneuver to a boy who was choking on a big wad of melted cheese. I've lost professional colleagues in 9/11, but also know many others who made it out in time. No doubt you have your own list of disasters and close calls.
Being alive is risky.
I'm the sort who always wears a seatbelt, looks at the safety information card on planes, and reads the latest in disaster literature. For me, managing the downside in life (not to mention investing) is well worth the time and effort.
My latest foray into disaster literature? The Unthinkable: Who Survives When Disaster Strikes - and Why, by Amanda Ripley. This fascinating book is less a survival manual than an exploration on how psychology, neurology and culture lead us to behave in unexpected ways under duress.
For example, our first reaction to disaster is often denial and a lack of urgency (not panic as most of us assume). There's a delay ... a milling around ... a gathering of belongings. "The public totally discounts low probability high consequence events. The individual says, it's not going to be this plane, this bus, this time," according to disaster expert Dennis Mileti.
Ripley explains that on 9/11, people didn't leave immediately. It took some six minutes, others 45 minutes. A thousand people took the time to shut their computers down. 40% of evacuees gathered items to take with them. Denial can result in an eerie calm and unexpectedly polite behavior. It took 15,410 people a lethargic average of one minute per floor to exit the World Trade Center; twice as long as expected. Had the building not been less than half full, the death toll would have been five times larger, due to the slow evacuation.
Ripley goes on to compare stress hormones to hallucinogenic drugs. Your heartbeat skyrockets and you get tunnel vision, literally, as your field of vision shrinks by 70%. Time slows down. You experience reality in an altered state.
Well, guess what? Losing a lot of money in a short amount of time can trigger the same kinds of disaster reactions - even among those of us who manage money for a living.
Some people go into paralysis mode, do nothing, and watch their assets melt away. Others are slow to react, and then panic. Still others just get swept up in the emotional contagion of their peers, selling low and buying high, based on the collective mood around them.
