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Decisions in Reality or Fiction

January 14, 2019

The other day I was listening to a couple in a coffee shop. They were trying to weigh whether to move or not. For those of you that don’t live on the west coast the cost of living has really gotten out of control. This couple was talking about schools, selling and buying a house, job search. By the end of it they never came to a decision. I could see the weltering anxiety on the wife’s face. I felt for her in that moment. These are the decisions we are constantly faced with in life. Luckily our unconscious brain does most of these processes without us noticing.

 

Our unconscious brain is amazing. While driving it quickly calculates whether slight pressure to the wheel will keep our car straight during a slight change of grade to the road conditions. At the same time, it calculates the probability of the car in our blind spot continuing at the same rate of speed pending the car in front of him. It even is pre-calculating the best probable path in the event that the car that is in front of the guy next to you veers into your lane is. All of this is mostly done without you ever being aware of it.

 

As they were discussing their options (no pun Intended), I felt like they failed to get to a reasonable decision because they failed to create the most probable outcomes for both decisions. They talked about how they would feel if… As much as feelings are important, I think when creating futures in your mind they are misleading. I have written in the past about how the future you paint in you mind is laced with the feelings in the present. This also works the other way around and can be a mirror looking at a mirror leading to an infinite void anxiety and fear.  Why do I focus on those emotions?

 

When we are faced with the unknown or uncertainty they are manifested emotionally as anxiety or fear. We crave certainty. Fun experiment, think of the last time you were anxious. When you had the boiling pit in your stomach and your heart was racing. Was it a first date? Was it a job interview? Was it after you lost a job? Was it looking at a losing position in you trading account? I would bet that if you were to examine the thoughts you were having at the time you felt anxiety they were centered around the future. In these moments there were so many possible outcomes that you failed to paint a future you can be curtain of. We crave certainty.

So what good is knowing all this junk? I mean if this is how we think then great, but what to do with it. Well we all live in the present but make decisions that we think is best for our future self. If you have kids, I would bet that you weigh all your decisions with your kids’ future in mind also, creating even more of uncertain future. The couple was lost and faced with absolute uncertainty. She was Projecting to her husband possibilities and outcomes that were so far fetch even I was getting stressed out. AH but that’s the key right there. We create a projection but then we need to quantify its probability and weigh it properly against the other projections we create. The wife said a comment like “But what if you can’t find a job for two years after we move, I can’t go back to work and take care of the kids”. That is a scary thought. You can tell she was fearful of going back to work. She was scared to death about not experiencing her kids’ childhood. My heart hurt for her. Let’s take a minute to quantify that future she just projected. How likely is this future to happen? First thing is to lace all info we can into the picture. He works in the tech field as a highly sought-after developer. Where they are moving has a growing tech focus. He has never gone more than 4 months between jobs. He has other trades he could do for side work while he is looking for a job. He also knows people in the area that are looking for people with his skill set. With all that info how probable is the future she projected. I would say the probability is in the low single digits of him going two years without a job after they move. Do you really want to base your decision to move on a ~2% chance? What if the couple decided to not move simply because of the situation she put forth? I would hate to think that I based My whole life on a fear, and to top it off a fear that is very unlikely to happen. Should you never drive a car because it’s possible to get into a car accident? She was creating a reality that was so far off base and framing all of her decisions around the make-believe reality rather than a closer to realistic one.

 

Now for those of you in a relationship that wants it to continue. This is not the time to say, “that’s ridiculous, look how crazy you sound right now”. Trust me on this. Emotions and reason don’t mix well. The part of the brain that produces the fear and anxiety also has the beautiful ability to temporarily shut down the higher-level thought process that are responsible for reasoning. I am sure you have felt this before. Try doing a complex math problem on a first date with the most gorgeous person you have ever saw. In fact, try just getting the date in the first place without stuttering. Even simple things are daunting when this mechanic it in effect.

 

If you are an investor/trader knowing this mechanic is active is invaluable. It truly is the holy grail. Even Warren Buffet has a saying. “be greedy when others are fearful”. In other words, use reason when others have lost theirs. How to do this? Once you feel the familiar feeling or realize that you are projecting multiple unknown variables activate behaviors that counter the mechanic. It has been proven slow deep breathing using the diaphragm instead of the chest slows the sympathetic nervous systems response to stress. Take a minute to meditate. I like to return to the present. Think about what action can be done right now. What things do I know right now? Can I look right now at a similar event and cross reference outcome possibilities. One exercise I love to use when I am getting clammy hands is playing out the fear. If it were to happen what would happen? What would I do?

 

The important thing is to make sure the decisions you are making today line up with the most probable future and the most wanted outcome. Use your emotions as fodder for reasonable projections instead of your emotions pushing you to the most improbable ones. Your emotions are telling you were your thoughts are. Your thoughts are going to dictate your overall path and the decisions you make.

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