Viet Nam prisoner of war, James Stockdale, experienced some of the greatest inhumanity towards man that anyone can suffer. He lived to tell about it, and he left lessons that can help us maintain perspective during this pandemic and can provide guidance on managing our financial decisions.

On September 9, 1965, Wing Commander James B. Stockdale was shot down over the jungle canopy in Hanoi, Vietnam. As he was parachuting out of the wreckage, he had the presence of mind to prepare himself for what awaited him when he landed. He said to himself, “Five years down there, at least. I’m leaving the world of technology and entering the world of Epictetus.”

Epictetus was a Greek philosopher who espoused, “There is no such thing as being a “victim” of another. You can only be a victim of yourself. Stockdale returned home a hero after 2,713 days in captivity. He later told Jim Collins, author of Good to Great, “You must never confuse faith that you will prevail in the end (which you can never afford to lose) with the discipline to confront the most brutal facts of your current reality, whatever that might be.”

Jim Collins coined the phrase “the Stockdale Paradox,” as a way to describe the battle we face between optimism and pessimism. We face such a struggle amidst this pandemic. We keep hearing that it will be another 30 days, and then things will be back to “normal,” and then 30 days come and go, and another time frame is thrown out for us to consider. What if it is another three to six months?

According to Stockdale, the optimists did not survive the brutality of the POW camp. They hoped for a rescue by Christmas. Christmas came without relief, and then they said the rescue would come by Easter. Eventually, they died of a broken heart. Optimism is not a good foundation on which to base financial decisions.

Here are some ways to make financial decisions in the framework of the Stockdale Paradox:

1. Realize the stock market is volatile yet time in the market is a proven strategy in the most unpredictable times versus running to the sidelines.
2. Revisit your risk tolerance – has anything changed?
3. Work with a financial advisor or financial coach to reallocate your investments if necessary.
4. Anchor your investment decisions with your financial plan – if you don’t have a plan, get one completed!
5. Balance your optimism or pessimism with the reality of the current economic state – learn what you can from trusted sources.
6. Don’t be a “victim.” We can only control ourselves and how we respond. Respond with knowledge and a plan.

Stockdale’s approach was to find a way of thriving in whatever circumstances he found himself in so he could make it day to day for as long as necessary. While we all hope for a speedy resolution to this pandemic, let’s do our best to be the masters of our fate and control our financial destiny with a solid plan and faith in our economic system.