Thank you Facebook. 

That is not something I say very often. I love that I can follow along with the lives of my friends, but otherwise, I am not a big fan of the social media platform.   

Nonetheless, I am thankful for a meme. Yes, those sometimes annoying photos with a caption sprawled across them, which get shared a lot. The inspirational ones are fine, but I can’t stand the ones with an image of a politician and some quote that may or may not have actually been uttered.

This image was about hurricanes and reminded me of how differently people respond to adversity. The image was prompted by tropical storm Erika, which on that date was trying to strengthen to hurricane strength. The weather channel had the center line of its “cone of uncertainty” pointed at my house.

This particular meme came to my attention near the end of August as the market was bouncing around substantially. At the same time, I saw several articles in which adviser types patted themselves on the back for warning clients a correction would come. This bugged me a bit.

Corrections simply aren’t unusual. The S&P 500 has pulled back at least 10 percent in 20 of the 36 calendar years from 1980-2015.  Predicting “a correction is coming” is hardly a stroke of genius. Just as Floridians should expect to deal with storms, long term investors should expect to have to deal with corrections and bear markets as a standard operating procedure.

The meme was titled “Hurricane To-Do List” and listed items under two headings. The first was for what the world would have on the list. That list included “watch the weather channel, buy batteries, pack evacuation kit, buy water, watch more weather channel and speculate with neighbors about hurricane”.

The second heading was for what Floridians have on their list. “Buy vodka, complain, plan hurricane party, speculate if work will be cancelled on Monday, buy more vodka and speculate with neighbors about hurricane party”.

And so it is when you have been through something firsthand. The theoretical becomes reality. The intangible becomes tangible, and scary things aren’t quite as scary.

The image made me smile even though I know hurricanes are no laughing matter. In 2004, my house suffered two direct hits three weeks apart. It took over a year before our house was fully repaired, and the neighborhood was free of blue tarps on roofs. Due to the water damage and mold, my then 6-year-old son couldn’t sleep or hang out in his room for 4 months.

The whole state was a mess that year and the trauma had some interesting effects that remind me of how people react to market drama. 

After 2004, for a time, most people were quite nervous about any storm development. If it looked like it would rain hard, the authorities considered closing the schools. Eventually when another named storm headed our way, local officials called for evacuations. The storm was a tropical storm. That is still serious, but it is not a hurricane and it was not of a strength that would have warranted the move to evacuate before the horrid 2004 storm season.

When the storm finally did hit, it was underwhelming. It didn’t seem like much more than a bad storm and certainly not a repeat of the 2004 disasters. Some Floridians were glad the authorities were extra cautious. Other complained the authorities overreacted. These days, we all remember 2004, but there are far fewer of my neighbors obsessed with the weather channel.

We see a similar pattern with investors since the 2008 crisis. For some period, many were hypersensitive to market fluctuations and news about the economy or markets. As time went on, most realized that the gyrations around European debt, the U.S. debt ceiling and ratings downgrade, the fiscal cliff and the like were just unpleasant storms and not Category 5 disasters. When the prospect of a Greek default once again made news this summer, we heard nary a peep about it from clients.

The behavior of people during the actual storms is interesting to me too. We evacuated inland even though we did not evacuate the last time a hurricane had come through the area. We reacted differently because we had kids. Our circumstances were different, so our tactics changed.

During a storm, you lose power, and it takes hours for a storm to fully run through your area.  The wind howls like a freight train. Debris hitting walls or boarded windows can sound like a bomb. It isn’t safe to drink tap water. If part of the structure gets compromised, there is almost nothing you can do about it while the storm rages. You just have to be patient, and wait for the storm to run its course. Riding out a storm is a challenge for adults but no place for kids, so we evacuated.

The main reason people do not evacuate is they want to get to the work of cleaning up as quickly as possible. In the aftermath of the 2004 storms, anxiety levels were high for months because people wanted their houses repaired fast. It just wasn’t possible. Significant damage takes time to fix. How many people made rash financial decisions during and after the 2008 crisis in an effort to get back what was lost?

There is always a contingent of people that won’t evacuate out of some odd sense of bravado.  They are defiant and insist no storm will make them leave. They will stay and “defend their property”. They remind me a bit of the people who just “won’t stand for losing money”. I remember a commercial in which the guy proudly exclaimed he wasn’t just going to “take it on the chin in this market”. OK, tough guy. Try not to hurt yourself.

A local news report said the leading cause of death in the 2004 storm season was electrocution.  Apparently, several of the people that stayed behind got zapped by downed power lines while trying to clean up the moment they could get outside or by the generator they bought to provide power after a storm. Their efforts to fight the prevailing environment cost them dearly.

The most revolting behavior after a storm though comes from the hundreds of scammers that descend on the area posing as legitimate repair or damage mitigation outfits. Bogus roofing, debris removal and hurricane shutter companies ran rampant. I think of these scammers when I see some of the aggressive tactics of some people offering some guaranteed products, alternative investments and “fat-tail” products. 

When a storm hits, you cannot fully protect your home from everything. You can have the best shutters in the world, but if you lose shingles or soffit or worse, you will get water damage in your home. You simply cannot hedge every risk.

As the meme suggested, hurricanes don’t bother many Floridians all that much even though the storms are serious matters. We know how to deal with them. When one does come, being prepared helps. Don’t leave the patio furniture outside. Board your windows. Get out of the way and take with you your valuables, your insurance policy and the contact information for your agent and contractors you know are legitimate.

Of course, unlike market drops, we know when hurricanes are coming. That can bring some urgency to preparations, but preparation doesn’t stop the storm from coming and mitigates only some of the damage. Even though we know it is coming, our homes and lives will still be affected by a storm.

If these storms are so bad, why do we live here? Ironically, one reason is the weather. The majority of the time, it is great with pleasant temperatures most of the year. When it is hot, we go in the pool or to the beach. If we miss snow, we will go visit it, then return to paradise.  Hurricanes that cause major damage are really not very frequent. Yet, people tell me they would never live down here because of the hurricanes. Just like I run into people who, despite the positive effects of prudent investing over the long term, won’t invest out of fear of the inevitable rough patches.

Preparation makes enduring the storm and recovering from its effects less difficult. To many of us with hurricane experience, it would be a shame to miss out on enjoying the many pleasant days not affected by storms out of fear for the relatively few a storm fouls up.

Clients can be in the same position with respect to their finances—prepared, less fearful and confident they can recover. They just need you to use your experience to help them get there. 

Dan Moisand, CFP has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager and Worth magazines. He practices in Melbourne, Fla. You can reach him at [email protected].