4 Ways You Can Take Advantage When Everyone Else Panics

Image Credit | Anna Tarazevich | Pexels

In 1857 there was a terrible crash in the markets. Grain prices fell and businesses shuttered forever. This market crash was called the Panic of 1857. This national financial crisis would lead to a crippling depression that would last several years. As the crisis unfolded investors began to dump their stocks. They sold them as the market fell and when it hit rock bottom. Many investors lost everything and had no way to climb back out of the hole they found themselves in. 

One young bookkeeper who was hoping to become an investor watched the panic around them. Rather than panic themselves, they took the opportunity to observe the behaviors and the outcomes of what was going on in the market. He could have taken the money he had in the market and sold it in a panic to try to preserve what he had, but instead, he held fast and used the disaster as a learning opportunity. 

The lesson that he learned, was that the market was unpredictable. No man or woman could accurately predict the future of the market with any kind of consistency. Speculation was akin to gambling and would lead to disaster as surely as pinning your hopes of retirement on winning at the roulette wheel. You should ignore the crowd and instead look for the opportunity everyone else is missing. 

This young man was John D Rockefeller. He would go on from this disaster and attract investors that were interested in oil drilling. Rockefeller would look at different opportunities and be initially cautious in buying oil wells. Some investors, eager to make a quick buck left him and jumped to other investments where they hoped to make a profit sooner. Rockefeller did not waiver and waited for the right opportunity and he eventually found them. Within 20 years he would control 90% of the US Oil market

Rockefeller was not born a genius who could identify gaps in the market and take advantage of them. He did not have an innate ability to outmaneuver competitors and win in the marketplace. He had a steady and calm demeanor. When others would run from the market with fear or buy-in with greed, He would calmly look at the market and identify the best opportunity. Here are 4 ways you can learn to take advantage of the opportunities that exist when others are panicking. 

Steady Your Nerves

This is the first and most important part. NASA famously puts their astronauts through a strenuous training program and subjects them to disaster after disaster in their simulators. This is done, not only to ensure they have the practice to know what to do but also to help their astronauts to remain calm when the alarm bells go off. They do not go into a panic, because panicking in space leads to death. Similarly panicking in the market can kill a company or destroy a retirement fund. You must acknowledge your fears and put them aside so that you can think rationally about the problem you are facing. 

Always Keep Learning

One of the reasons that the Astronauts do not panic is that they have become desensitized to the sound of the alarm. The other reason, of course, is that they have learned how to react in different situations and have enough practical experience and knowledge to be able to innovate when a new situation presents itself. 

The Roman philosopher Seneca said 

"Luck is what happens when preparation meets opportunity."

The lesson here is to always keep learning. You cannot invest in the market if you do not understand it. You will not see the opportunity in a situation if you don't understand the basics of how things work. Take time every day to study and learn something new. When an emergency happens you will be able to see what others may not and be prepared to take action. 

Observe What is Really Going On

Human beings draw on a lifetime of experiences to identify and see patterns. These exist to help us react quickly to institutions where danger exists. They help us to ensure that we get to live another day. These instincts were developed from our time in the forest where we might hear a ruffle in the bushes that meant a jaguar might jump out and attack us. While those intuitions serve us well in some situations they can cause us to jump to conclusions and miss opportunities that exist in front of us. 

When everyone else is panicking and reacting without thinking, take a moment to look at what is going on around you. While everyone else is running in one direction run in the other. There is an opportunity there that they haven't seen. Look calmly and objectively at what you see and identify the opportunity you can take advantage of. For example, when the SEC announced a lawsuit against the parent company of the XPR coin, investors sold their coins in a panic and the value fell to less than 30 cents. Many clever investors looked at the price and realized it was being valued much too low and bought more XPR. Those investors now own coins worth more than $1 each more than tripling their investments. They saw the opportunity in everyone else's panic to get out of the market. 

Take Action

Taking action can be the hardest part. People tend to have 3 responses to an emergency situation. They can Fight, Flight or become Paralyzed with fear. Those that fly or become paralyzed will miss the chance to take advantage of a situation. Those that fight may or may not be successful. Some just react with panic and those take a measured approach to response. When presented with the opportunity, your steady nerves, observation of the truth and the knowledge you've gained through the careful study will prepare you to take action. Take bold action based on that experience and knowledge and move forward. Only by taking action can you hope to benefit. 

I have been able to use these lessons myself to help keep a steady and objective mindset in emergency situations and take the right action. I've avoided panic selling good investments and respond calmly when others were panicking. How have you reacted when others panic? Did you panic as well or did you find a way to take advantage of the situation? I want to hear about it! Tell me below or contact me!