(Tuesday March 10, 2020, 8:30 p.m. ET) - Seeing the stock market plunge on news about Covid-19 is unnerving but is not so unusual. It's human nature to get worried amid a market plunge and think this is the plunge from which there is no recovery.
Coronavirus is not the first time investors faced a crisis that seemed like it could break the world's financial economic system.
In the 1962 Cuban missile crisis, investors undoubtedly wondered, "Is it different this time?" The 1973 oil embargo, 1987 stock market crash, 9/11 terrorist attack, and 2008 financial crisis were similar times of rampant fear.
Psychologists theorize people use their "caveman brain" to explain why people often react emotionally to market plunges. Humans are hard-wired to run from danger. While we are obliged to disclose that past performance is not a guarantee of what will happen in the future -- this time indeed could be different -- we are also obliged to say as prudent investment advisors that the world has a strong record of surviving terrible crises, at least since 1957. Your caveman brain may need to be suppressed to protect yourself in the modern world.
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