You have what it takes. You can choose to be a survivor.

Award winning author, Laurence Gonzales, studied hundreds of incredible true stories of survival in extreme conditions, and then distilled what he learned in to an insightful book, Deep Survival. The tales are awe-inspiring. A 17 year old girl that survives a plane crash, (miraculously, without a parachute) in the middle of the jungle and then later marches out to safety over 11 days. A yacht that sinks in the middle of ocean, and the Captain, set adrift at sea for months, survives by catching fish and collecting rainwater.

These are extreme survival scenarios, but the parallels to effective investment decision making are rich and deep. Tolstoy once wrote that all happy families are all alike, but every unhappy family is unhappy in its own way. So it is with survival. Despite coming from a diverse array of backgrounds, the survivors always take similar actions and most importantly have similar mental attitudes and models for how they think about the world. As investors, there are immense lessons that we can draw from these epic tales of survival, here are three big ones:

#1: Face reality

“Even in the initial crisis, survivors’ perceptions and cognitive functions keep working. They notice the details and may even find something humorous or beautiful. If there is any denial [of their plight], it is counterbalanced by a solid belief in the clear evidence of their senses. They immediately begin to recognize, acknowledge, and even accept the reality of their situation.”

Being present in the situation not only removes a big mental burden, it frees our faculties to consider the opportunities for survival around us. There are obvious parallels for investors when there is a market crash or a big fall in one of our stocks. Instead of getting caught up in the self-pity of the herd, investors should focus on looking for the opportunities that are still available.

But the lesson is broader than just dealing with the extremes of a market crisis. Every day is a new opportunity for investors, yet it is easy to become trapped in the past. If our company’s shares are up 20% we can easily anchor on the past price and avoid buying more. Or, if the shares are down we may hold on solely to avoid the pain of realizing a loss. Instead we should stay present, the past price paid is an irrelevant anchor, all that matters to us now is the future.

Remaining present is not easy. Deep Survival suggests that the best survivors are maintain a healthy sense of humour. They keep their thinking light and flexible, freeing the brain to operate at its highest level. We should find ways to build playfulness and levity in to our own investing processes. There is something beautiful, funny, or interesting, to be found, in even the darkest situations.

#2: Take ownership of your situation

This might sound like an odd lesson for investors since there are clearly such huge, unpredictable forces, that operate outside of our control. But even if its not always our fault, taking ownership of our situation is the first step toward improving it.

In extreme scenarios the people that make it out alive are the ones that take full responsibility for their situation. By doing so they instantly transform themselves from victims to survivors. Their mentality has shifted. No longer are they at the whim of forces beyond their control, instead they begin the arduous task of bending those outside forces to their will.

Note that this does not mean that the survivors have caused their horrible situation, or that it is possible to survive every scenario. A passenger in a plane that explodes over the jungle, or a sailor that is struck by a whale, did not cause their predicaments. But, by believing that they are solely responsible for their survival, they have taken back their power.

The opposite approach is to blame others for your situation, to despair at how unfair the world has been to you. While it may be true that you have been dealt a horrible hand, believing that outside forces are responsible for your situation also means believing that you are powerless to change it. Accepting responsibility means taking the power back and giving yourself the chance to change your situation.

Not all people with this survival mindset will make it. Often the forces working against them are simply insurmountable. But by taking responsibility for their situation, no matter how dire, they have given themselves a chance. The best possible chance of surviving it. For investors, taking charge of our own portfolios (ideally with the assistance of a trusted guide) is the first step towards victory.

#3: Take smart risks to find a new way forward

With all the tales of things going wrong it would be easy to think the best approach to survival would be to avoid taking risks. But after studying real scenarios Gonzales found that smart, decisive, risk-taking is actually the key to survival.

Steven Callahan, was an extremely experienced sailor that was crossing the Atlantic solo in his well equipped yacht when in the middle of the night he was suddenly struck by a whale (!) and woke to find his cabin flooding with water. His quick reactions allowed him to make it out of the cabin and deploy his life raft. But sitting in his life raft in the middle of the Atlantic ocean, he quickly realised that there would be no rescue party. His meager survival rations would not last long. If Steven wanted to survive, he would have to dive back in to his sinking yacht:

“The next step was to take bold action while exercising great caution, which is but one of the many delicate balancing acts necessary for survival. So he dove back in to the flooded saloon to retrieve his survival bag. He made it out and returned to the raft. When he eventually let go of Solo [his yacht], he was very well equipped, considering the circumstances. He had just saved his life by risking it, which is the essential task of every organism. No risk, no reward. No risk, no life.”

Steven Callahan went on to survive after being adrift in his life raft for an incredible 65 days. As with investing, the best survivors are willing to take smart, calculated risks when necessary to ensure their own survival.

Get in My Brain

Deep Survival by Laurance Gonzales is often a thrilling read, stepping from one incredible survival scenario to the next. If the book were just a collection of these awe-inspiring stories it would be well worth the read. But Gonzales goes much further, providing dozens of excellent insights into the mind of a survivor. As investors we aren’t dealing with anything nearly as extreme as a life and death scenario, but seeing a position down significantly can often trigger similar deep emotional responses. The principles of Deep Survival give us the tools to not just cope with anything the market throws at us, but take the strong decisive actions that will enable us to seize the opportunities that are always in front of us.