The Captain Sully Guide to Investing in a Crisis
What Captain Sully Can Teach Us About Investing in a Crisis
I was poking around online the other night and watched the movie Sully, which tells the true story of Captain Chesley “Sully” Sullenberger’s “miracle on the Hudson.”
On January 15, 2009, U.S. Airways Flight 1549 took off from LaGuardia Airport. But six minutes after departure, a bird strike took out both engines of the aircraft.
The “Airbus A320” lost power. Smoke and the smell of jet fuel filled the cockpit. Every siren on the dashboard started blaring and the aircraft began plunging to the city below.
Ground control ordered a landing at an airfield 10 miles away in Teterboro, New Jersey. But Captain Sully realized that the plane wouldn’t make it. Instead, he opted to glide the plane down into the Hudson River that flows east of Manhattan.
What happened next made the crew of Flight 1549 American heroes. Captain Sully and his co-pilot Jeff Skiles hit the river hard but kept the aircraft intact. Their quick thinking and calm focus saved the lives of all 155 souls on board.
It’s not a bad analogy for the situation that investors face today.
I won’t sugarcoat it. Fears of a coronavirus pandemic have sent shock waves through the financial markets. Stocks have crashed. Bonds have soared. Oil has tanked. Gold has skyrocketed.
And investors have good reason to panic.
Experts have predicted that the coronavirus could kill millions of people worldwide. Quarantine efforts could grind the economy to a halt.
Short-term, any industry related to travel (airlines, hotels, cruise ships, etc.) will get smoked. Long-term, the breakdown of corporate supply chains will take a whack out of profits.
It’s the economic equivalent of finding yourself in a plane at 10,000 feet with both your engines on fire (and you left your parachute in the laundry).
But here’s the deal: success in the stock market has more to do with being a good investor than picking good investments. Your results depend in large part on how you handle moments of extreme stress.
Moments like the one we’re in now.
So how do we go about investing in a crisis? Well, in times like these, it pays to take a page from the aviation industry.
Pilots undergo training to prepare them for crisis situations. It allows them to remain calm under pressure and handle situations in the best possible manner.
Investors can follow the same tools and techniques.
Admittedly, it’s not easy to remain calm. Watching thousands of dollars evaporate from your brokerage account feels like a kick to the gut. It’s all the harder if you’re approaching or already in retirement.
But the worst thing you could do right now? Panic.
Instead, it pays to handle stock market crashes in the same manner as Captain Sully. If you can remain calm and professional, you stand the best chance of surviving (and maybe even profiting) from the current round of scary headlines.
Here are five lessons we can learn from pilots for investing in a crisis.
Deliberate Calm: The brain automatically switches to panic mode in dangerous situations. Yet Captain Sully managed to push through his fear and override it with rational thought. Neuroscientists call it “metacognition.” Pilots call it “deliberate calm.” Understand that you have a surprising amount of control over your emotions. When investing, choose to be calm under stressful circumstances.
Sit on Your Hands: Aviation training emphasizes a concept called “sitting on your hands.” When something goes wrong, pilots avoid the temptation to start pulling levers. Instead, they take a deep breath and review the situation. That one or two seconds gives your brain a chance to understand what’s going on. Then you’re 90% more likely to take the right course of action. Investors can follow the same procedure. Don’t start making investment decisions right away. Take one or two days to review the situation.
Courage Is Contagious: Before landing in the Hudson River, Sully said over the intercom in a calm and monotone voice, “This is the captain. Brace for impact.” The tone here is key. By keeping a professional demeanor, Captain Sully avoided scaring his flight crew or the passengers. That ensures a quick and safe evacuation upon landing. Have you checked your tone? By keeping a cool demeanor in your conversations and social media posts, you can avoid panicking friends or loved ones. Courage, as Captain Sully likes to say, is contagious. And if everyone around you remains calm, you can make better decisions yourself.
Prepare Prepare Prepare: Captain Sully credits his successful landing to years of training. Moreover, pilots keep checklists with step-by-step instructions to handle all situations. That way, they can follow best practices established ahead of time rather than improvising on the fly. The same thing should apply with the stock market. Keep a written plan with details of exactly how you’ll act during downturns. That way, you can simply execute a well-thought-out strategy made beforehand. That’s far better than the alternative of making things up during a stressful situation.
Keep a Mantra: When Captain Sully first felt the effects of the birds smashing into his engines, he told his first officer, “It’s my airplane.” That mantra was actually part of Sully’s emergency protocol to maintain control and avoid paranoia. Investors also need an emergency mantra, a core belief that you can look to when under great stress. For me, I always repeat, “We’ve been through this before.” America has faced an untold number of challenges, yet has always come out ahead. Repeating that phrase keeps me calm in periods of turmoil and helps me avoid mistakes.
Stress can fuel a furnace for bad decisions, especially when investing in a crisis. Practice deliberate calm. Display total confidence. Prepare for the worst and expect the best.
If you can handle a stock market crash like Captain Sully handled his aircraft, then you will give yourself the best chance to survive (and thrive) during a downturn.