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The Wisdom of Ignorance

The Wisdom of Ignorance

June 30, 2023

Whelp, we survived another one. It feels like we made it by the skin of our teeth, but we made it. Now, on to the next thing – whatever it is. Am I alone in the feeling society is just careening from one crisis to the next? Could “calamity after calamity” be our new normal?

Let’s think about just the last few years: we had a global pandemic, January 6th, Russia’s invasion of Ukraine, sky-high inflation, school shootings, tensions in Asia, a banking crisis, and, of course, our most recent predicament –the possible fiscal default of the United States. This latest – and entirely manufactured – crisis was sure to derail society as we know it. But it didn’t, and in the end cooler heads prevailed, an agreement was struck, and the stock market rallied. I’m exhausted just writing this.

It was a conversation on an online forum that’s making me think of all this. The person who began the thread said he was selling all his investments and moving to cash because he was convinced the U.S. would default on its debt rather than raise the debt ceiling. Scores of investors commented they had already sold or were seriously contemplating doing so. With the benefit of hindsight, we know this wasn’t a good decision, given that the market has rallied almost 5% since May 31st, the day before the House of Representatives approved the deal. My point isn’t that they made the wrong decision, but that they were controlled by emotion, and made a long-term decision based on a short-term event.

If it’s true we’re just going to bounce from crisis to crisis, how will people know which ones require action and which to ignore? Won’t all this worrying have an adverse impact not just on their investments but on their mental health as well? I’m not sure how realistic it is to follow the traditional guidance to “leave emotions out of investing.” Emotions are often why we invest – hope for our future, love for our family, and the need for security are all common reasons. With the 24-hour, non-stop barrage of news, headlines designed to create an emotional response, and a deluge of social media feeds, feuds and anger, there’s no way to remain emotionally detached from the topic du jour. What’s more, as our world becomes more politicized, our tribal affiliations are increasingly driving our feelings and decisions. (See figure 1). I suggest the better course for modern times is to understand your emotional response and how it affects your decision-making, reduce the chances of making a bad decision and build up your resilience to negative stimuli.

When it comes to investing, the place to start is to understand why you’re investing in the first place. Are your goals short-term, say within five years, or are they further into the future? If they’re short-term, you really shouldn’t be invested in the stock market because you may not have time to recover from a selloff. If your goals are long-term, events of today will likely have little to no bearing on your eventual outcome, so steel yourself against reflexive responses to the crisis of the day. Now that you know why you’re investing, create a solid plan that takes your attitudes towards risk into consideration, and invest your money across a variety of investments. By starting with a strong game plan, you’ll minimize the number of decisions you must make, which means less opportunity to make a mistake. You know the markets will go up and down – they always have and always will. Strategies such as these are designed to bend, but not break. Having confidence in your plan will help you stay put, stay sane, and weather the inevitable storms. Talking with your advisor can help keep things in perspective, providing an informed and dispassionate third-party point of view, and keeping you from making a decision driven more by emotion than logic.  

Next, balance your news intake and set limits on your exposure. Our brains just can’t consume a never-ending stream of negative information; it takes a toll on our well-being. When confronted with a perceived threat, stress hormones such as adrenaline and cortisol are released. This physiological response is what’s needed for an immediate emergency, such as being chased by a bear. But when the perceived threat is longer-term, such as a looming U.S. debt default, this extended response can manifest as anxiety and affect our sleeping and eating habits. The reality is that social media is commoditizing fear and monetizing emotions. The algorithms are designed to exploit our fears to keep us clicking. In the early months of the pandemic, the barrage of negativity and fighting started to affect my attitude. So, I decided to forgo social media and news during the weekends. After all, much of what was happening was out of my control. Instead of feeling helpless, confused, and angry, I decided to give my mind and heart a break. I’ve enjoyed this so much that I still do it today. There’s good news out there too if you seek it out. I subscribe to a few social media channels with dogs and other animals; nothing breaks up the doom-scrolling and balances the brain’s release of stress hormones better than a sloth cuddling its baby or a puppy snoring.

We have endured periods of great uncertainty and crisis before, the 70’s were no picnic (or so I’ve been told ….). What’s different today is that we have constantly updating access to concerning news. In the past, with TV news a couple of times a day and a daily newspaper, you had control over your intake. Today we’re drowning in information that is often false and misleading, and feeds on our fears. We can’t escape it without making a conscious effort to do so. The good news is that not only did we survive the uncertainty of the 70’s, but we also thrived, and the world became a much better place. I have no doubt the future holds the same, but we must adapt to our new normal. The new normal isn’t the uncertainty or the number of crises we endure, it’s the way we consume information and ease with which misleading and incomplete information can spread. In conclusion, I leave you with this quote from Ralph Waldo Emerson – “There are many things of which a wise man may wish to be ignorant”. I wish you all a wonderful, fun, and relaxing summer.


The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC.