At any given moment, millions of people are grappling with the lingering impacts of a natural disaster. Last year a series of massive earthquakes struck Mexico. Floods in India, Nepal and Bangladesh killed over 1,200 people. Historic wildfires raged across the state of California and a string of powerful hurricanes devastated U.S. cities from Texas to the Virgin Islands.

These large events commonly steal the media spotlight for only a short while before they are replaced with the next crisis. However, the effects of these disasters can linger for years after their memory has faded from the public eye. Periodic reminders about the ongoing state of disarray in disaster zones can be just as important to the recovery efforts as coverage immediately following the event.

It may be easy for most RIT sudents who have no direct connection to places like Houston or Puerto Rico to forget about their ongoing plight, but the university is home to over 18,000 students. For some members of our community, the effects of hurricanes and floods are not so difficult to remember at all.

“We're a global community. We have people from everywhere, so when these types of things happen odds are there are going to be students here who are impacted in some way,” said Kerry Foxx, director of the RIT Center for Leadership and Civic Engagement (CLCE).

Even if no one we know has been directly impacted, when most people hear about a devastating natural disaster our first impulse is to help immediately in some way, often by giving money or material goods to help the relief effort. However, despite the urgency of the situation, if we don't stop to think about the impact of our well-intentioned charity we may wind up doing more harm than good.

Coordinating the Relief Effort

In the U.S., large-scale disaster relief operations involve a collaboration between federal and state government, non-profit relief agencies, local leaders and survivors themselves. These efforts often include tens of thousands of volunteers and personnel that must be coordinated across dozens of organizations.

This hardscrabble network must establish itself in a disaster zone within a matter of days in order to find out what damages occurred and who needs help. Unfortunately, one of the biggest challenges to restoring order immediately after a disaster is all the help that floods into the affected area. Leaders in the disaster zone have to manage the often overwhelming influx of volunteers, financial capital and physical donations so that nothing gets lost on its way to survivors.

It takes some time to build up enough infrastructure to begin accepting large volumes of donated physical goods like canned food and bottled water, toiletries, building supplies or even furniture and clothes. All these goods are often needed and appreciated long-term, but when too many of them arrive in a disaster zone too quickly, it creates what relief personnel often refer to as “the second disaster.”

“After Hurricane Katrina, people were sending clothes down to the area and we know that most of them had to be destroyed because there was no infrastructure in place to get the clothes from the port to people who needed them,” Foxx said.

It's not uncommon for volunteer centers to be forced into tossing out well-intended but poorly timed donations for lack of a place to store them. Disaster relief leaders generally recommend not donating anything in the first few days and weeks after a disaster except for money or, if you have specialized skills, your time. Sending the right thing at the wrong time can be worse than sending nothing at all.

“There comes a point in time when those types of things are helpful. It's never in the immediate wake of a disaster,” Foxx clarified.

That's why financially supporting experienced organizations which are part of the Volunteer Organizations Active in Disaster (VOAD) council is the best way to help initially. The American Red Cross, All Hands and Hearts and Habitat for Humanity are just a few of the major groups on the list. These organizations have the expertise, supply chains and connections to stretch your donated dollar as far as it can go.

Student Efforts

In the wake of past disasters, many RIT students have risen to the challenge and jumped aboard the effort to send financial support to recently afflicted areas. Greek life leaders have organized events to raise money, campus clubs like the Student Environmental Action League have run fundraisers and bake sales and the university has hosted Red Cross blood drives.

A number of students traveled in person to disaster zones in Texas and Florida to volunteer their time with RIT's Alternative Spring Break program. Maria Lelie is a second year Business Management major minoring in Environmental Studies, who went to Houston and spent time with a woman whose home was destroyed when Hurricane Harvey hit the Gulf coast last fall.

“When we got there Benny [the client] was standing outside of her home so we got to meet her right away,” Lelie said. “She told us why her house looked the way it did, what happened to her, what her experience was in the hurricane. Then we just went in and started working.”

Something that's often missed in the rush to help as many people as quickly as possible is the human element of any disaster. People don't want to be treated like charity cases to be pushed efficiently through a system, and that kind of detached way of helping isn't really what most volunteers are after. The relief organization Lelie worked with during her Spring break trip, Operation Blessing, understood this.

“Their one quote was 'hope inspires healing,'” Lelie said. “They wanted us to talk to the homeowners a lot because it would give them hope and faith that they're going to have their home restored. It comforts them, makes them feel like they're not alone in the process.”

Some students, like fifth year Information Technology major Thomas Kurien, have gotten even more creative with their efforts to contribute. He used his Twitch videogame streaming channel, Thespacen3rd, as a platform for disaster relief after Hurricane Harvey.

“We have quite a few people in Texas as well as Florida," Kurien explained. "Talking to them and listening to their hardships, I was like, 'Enough is enough.' I've got a pretty big community now, so we banded together to raise money for charity.”

Kurien reached out to other prominent streamers to coordinate a 24-hour streaming marathon. Together, they raised almost $12,000 for the American Red Cross' hurricane relief fund.

Moving Forward

As the inevitable finger-pointing and political unrest surrounding the disasters continue, stories like these get to the heart of what natural disasters should mean to the world at large.

“When the time comes for a scenario like hurricanes or wind storms or whatever to happen to you, wouldn't you want the same kind of help to get back up and running?” Kurien asked.

For survivors, the immediate aftermath is usually a time of incredible loss and uncertainty. But the silver lining of any disaster is the outpouring of support and the bonds that grow as people from every walk of life come together to heal devastating trauma. Cities that were the epicenter of widespread destruction become the focal point of renewed communities that spring up around the wreckage.

source: https://reporter.rit.edu/features/responding-natural-disasters-0

The $140 billion drop in the value of General Electric Co.’s stock price during the past year gets the full human interest treatment in the Wall Street Journal. I don’t want to minimize the deep individual suffering of those who had their retirement savings tied up in GE’s stock, but it is as good a time as any to examine a host of human failings. My hope is to help others avoid a similar fate.

The Journal sums up the scope of the problem this way:

The stock value lost by GE in the past 12 months is twice the amount that vanished when Enron Corp. collapsed in 2001 — and more than the combined market capitalization erased by the bankruptcies of Lehman Brothers and General Motors during the financial crisis. Longer term, GE’s market capitalization has fallen more than $460 billion since its 2000 peak.

This sort of thing has happened many times, as that paragraph indicates, and it will surely happen again. There are several forces that keep driving these errors. Recognizing and understanding them is crucial:

• Survivorship bias: There is a natural tendency to evaluate the world around us based on what we see and remember. That can lead to a somewhat distorted view of how stocks behave over the long run.

  One of my favorite examples of this is the case of the forgotten and then found stock certificate. It resurfaces every few years. A classic example is the man who in 2000 discovered he owned EMC shares purchased for about $16,000 year earlier that now were worth about $5 million; a more modern example is a forgotten and rediscovered purchase of Bitcoins.

  The purported lesson is that if you just buy a good stock or asset, and forget about it for a few decades, you can become rich. I suspect that is what the GE employees (and all too many others) were thinking when they overweighted their retirement accounts with company stock.

  But here is the problem with this concept: These stories are only newsworthy when they show great wealth creation. To those who discovered dusty old shares of Enron or Lehman Brothers in 2015, no one would write the article “Local man finds worthless paper in attic.”

  This is a classic example of survivorship bias, and it can skew investor expectations for future returns of individual investments.

• Failing to appreciate diversification: For a variety of reasons, people do not understand the value of having a broadly diversified portfolio. Perhaps they think it shows a lack of corporate loyalty to their employer; maybe it reflects a bit of a lottery-ticket mentality that perhaps your employer is the next Apple or Amazon or Alphabet (Google). Wishful thinking might suggest diversification is giving up a potential fortune.

  But every worker who gets company stock also gets a salary from that same employer. That is a very intense concentration of financial risk. For those workers, diversifying their company stock into broad indexes is the prudent approach. They won’t become Jeff Bezos, the world’s wealthiest person, but they will have happy, well-funded retirements. This is a rational and prudent trade-off (especially since almost none of us are going to become the next Jeff Bezos anyway).

• Risk and reward are closely related: The flip side of all high expected returns is increased risk of lower returns. To me, this is the single most important rule of investing. To get better than average returns you must be willing to accept higher -- sometimes much higher -- levels of risk. This means that sometimes, you will receive lower returns and even losses. This is how investing works.

  The inverse is that if you want safety you must accept the inevitability of lower returns. Failing to understand these simple principles is the biggest error almost all individual investors make.

• Failing to create a financial plan: All of this comes back to the basic question of why invest in the stock market in the first place. If your goal is to become rich, then (hopefully) you understand the odds, and sometimes the roll of the dice goes against you. But the more rational goal for most employees of big companies is to have more measured objectives: saving to buy a home, paying for the kids’ college, and most important of all, securing a comfortable retirement.

  If those GE employees had created a long-term financial plan, I believe it would have been obvious to most if not all that they were taking on more risk than was necessary to achieve those goals.

The fall in GE’s shares has caused many people a lot of pain. It could easily have been avoided.

To contact the author of this story:
Barry Ritholtz at This email address is being protected from spambots. You need JavaScript enabled to view it.

source: https://www.bloomberg.com/view/articles/2018-04-23/how-to-avoid-a-retirement-disaster