How do you feel about spiders? When it comes to common spiders, most of us realize they are not that deadly, yet many of us would categorize them as frightening — maybe even terrifying for some! This is one of the many cases in which we find something scary, even though it may not actually be very dangerous. I recently read this article from RealClear Politics that distinguishes between these two terms, “scary” and “dangerous,” and how they have played a major role in the world’s response to COVID-19.
Perceiving something as “scary” makes us react with fear rather than logic, whereas putting danger into perspective helps us make more informed and rational choices. I have experienced this time after time with investing — understanding the difference between an investment that sounds scary, and an investment that is actually dangerous and risks your money, is the key to smart investing. We need to apply this to every part of our life. Again, think of the spider: a small house spider darting across the floor might be scary, but it probably poses no danger. If we took the time to calculate the risk, we could use logic to understand the actual danger instead of allowing fear to determine our actions.
Risk is a part of everything in life, including investing and determining how to respond to a global pandemic. The latter, especially, has been on everyone’s minds lately. As the article states, COVID-19 has become something scary; but when it comes to how dangerous it is, it ranks relatively low. So, is our societal response to it overblown and driven by fear?
Check out the article by clicking on the button below.