Dealing with volatility.

Volatility: liability to change rapidly and unpredictably, especially for the worse.

I pulled this definition from a dictionary. Those last 4 words are shocking to me. They also show the human bias towards negativity.

A business owner may make a killing one year, buy a bigger house and a new car, then the next year the business suffers, and he has to mortgage or downsize his new house, sell his car, and open a line of credit to weather the bad times waiting for the good times to come back. That may seem to fit that “especially for the worse” part, but that’s a matter of opinion. What if that home and car were much nicer than most people can ever afford? Is using them for a year and enjoying them not a privilege? Is it only possible to see the loss of them, rather then the 1 year and enjoyment of them?

This shows up other places as well. Cryptocurrency or stocks may soar up, crash down, then reach even more unimaginable heights. In many cases, large players are creating this emotional rollercoaster to get people to sell when things are low and buy when things are high. Again, they are able to get people to sell when things drop only because of the natural bias of negativity and thinking it won’t come back to level they bought at.

Even daily, your morale may rise or fall on the daily based on world events, your relationships, the amount of clicks on your blog, or the weather. Are we so fragile that we think everything is sad because it’s raining today?

Most people aren’t naturally good at dealing with volatility and it’s totally natural. We like consistent assumptions in our universe. As an employee, you get a consistent paycheck every week and know how to spend it. Living in Southern California rewards you with consistently beautiful weather where you can make daily plans outside. Investing in a diversified index fund yields more consistent returns able to better predict that retirement date.

There is nothing wrong with consistency or volatility as long as you know the consequences of them. The biggest positives can come from the most volatile events, but if your negativity bias kicks in, you’ll only ever see the big drop that can happen. That is even coded that right into the dictionary. Dealing with volatility and expectations is a skill, and it needs practice to be managed. Have you put your reps in on this?