Clients, we’ve discussed before how the pain of a loss is felt two times more greatly than the happiness from a corresponding gain. While this may be how our human brains are designed to experience things, we do have a chance to intervene: we get to define what a loss is. We also have the ability to recognize how time affects our experiences of pain and happiness.
Often, our losses occur suddenly: a quick drop in the market, the sudden failure of an engine, the physical (or emotional) loss of a friend.
Gains are usually slow-building: years and decades spent with a loved one, miles upon miles with your favorite car, the slow climb to retirement wealth. It’s hard to appreciate the full happiness of the good times in the moment. The quick strike of the sad times, however, tends to linger.
Journalists Stacey Vanek Smith and Cardiff Garcia put it this way: “This combination of sudden, bad things and slow, good things can mess up the way we see the world. We notice the sudden but miss the gradual.”
So the daily news cycle is successful in part because of that pain. Consider for a minute a world where there isn’t daily news. In this world, you get one newspaper every December 31, recapping all of the important things that happened that year. What would make the front page?
Now extend the time horizon. What makes the front page of a once-in-a-decade newspaper?
We encourage you to take this exercise and apply it to your financial life. Call it The 50-Year Financial Times of You. What’s above the fold? Would any of the four major financial crashes of the past 50 years get the top spot? How about that $4 that you spent on a coffee last Tuesday?
Clients, we each have the byline in our own 50-Year Financial Times of You. We’re grateful to be among your readers, and humbled when we’re included in the process—even if it’s in the funny pages.
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