Social media and network news offer an endless stream of information, and a large percentage of it is negative. When we spend much of our time consuming that negative news, it begins to affect our mood and our emotions. In this episode, Brendan compares this effect to the parable of the two wolves and emphasizes the importance of recognizing what is possible versus what is probable.
The parable of the two wolves
Network news and social media’s effect on our emotions
Possibilities versus probabilities
Not letting the evil wolf win
Welcome to another coffee with Brendan. Today's episode is kind of a special one. I'm not going to bring up any charts or graphs or anything. I'm just going to talk a little bit philosophically here, about the markets and more specifically behavioral finance.
So let's jump into it with a little bit of a parable. And some of you may have already heard this parable before, but if not, I think it's a good one to start with. So it's called the The Tale of the Two Wolves. And the way the story reads is it goes something like this. An old man speaks to his grandson about life. A battle rages inside of me, he says it's a dig. It is dangerous and it's between two wolves. One is evil is angry, envy, sorrow, regret, arrogance, self-pity, guilt, resentment, lies, superiority, and ego. He continued, the other is good is joy, peace, love, hope, serenity, humility, kindness, empathy, generosity, truth and faith. The same fight goes on inside each, each one of us, you and me and everyone else. Well, the grandson honored his words, pause for a minute, and then ask his grandfather, “Which one wins?” The grandfather responds, “The one you feed.”
And so I start with that, because I'm seeing this more and more with my clients. And it does feel like it's, it's become more prevalent in just the last few years, maybe in the last five to 10 years. And I don't think it's any surprise that it's probably something to do with social media. And, you know, I know, I know, we all love to give kids grief about Tik Tok and Facebook and Instagram and all these other things, but people older 40s 50s 60s plus, are just as susceptible to social media as anyone else.
And what I've, I've noticed and it's kind of really hit home in the last couple of weeks as I interact with a couple clients, that social media but more specifically, the negative news. The endless news feeds, the cable news networks, the streaming services and even friends and family emailing and texting different things about how the world is going to hell in a handbasket. All of those things chip away at people. And this constant barrage of alarming headlines, inflammatory opinion pieces, and frightening world events leads to this mindless, some people even call it doom scrolling, where you're just scrolling through on your news feed or whatever social media thing that you're looking at all the all the reasons why the United States is headed to a disaster and why the markets are headed towards a disaster.
And, and people just keep feeding themselves just like the evil wolf feeding themselves with all this negativity, and it's no surprise that people are more stressed today, more anxious today. And, you know, when you when you look at - again, I'll kind of tie it back to my own experience with some of my clients, the clients that are the ones that come in, and they're very nervous, very anxious about what's happening with the markets and even starting to talk about, let's start taking some defensive measures that sell out of the stock market, get into something more conservative. Those are the people I always ask them the question, are you watching a lot of news? Are you reading a lot of things? And the answer is yes. You know, these are the people that have the cable news channel on in the background 24/7. It's always on like a constant drone. And you know, if you ever take a step back from those, any news channel, whether it's just your local news or whatever, it really is 70 to 80% negative news. You know, who was killed last night? You know, what's happening with the economy? What's going on overseas? How is Russia? China going to start world war three?
All this negativity it can't help but start infiltrating your consciousness and actually start making you a more stressed and anxious person. So again, it's starting to now infiltrate and hijack people's rational decision making, as it pertains to my job. And in a lot of times my job as, as a financial planner, is to try to, to, to clear away some of the fog, and focus people's attention on things that are probable events that could potentially happen, versus things that are possible.
And so I'm not saying that some of the negative headlines and things that are out there are to be dismissed. I'm not saying that at all. I think you can still stay informed without letting negativity overwhelm you. But what I do want to just highlight is that, again, I have clients coming in and talking about all sorts of different theories and different things that they hear on the news. And they asked me, you know, what do you think about this, you know, I, a client recently sent me something about how Ukraine - Ukraine is the linchpin in worldwide fertilizer. And if Ukraine gets gets overthrown, and Russia restricts the supply of this fertilizer, then we're going to have mass hunger. And so this client was actually thinking about what do we do? If there is mass hunger and food shortage in the United States? Again, it's possible don't get me wrong, it's totally possible. Like, did I ever think that, you know, January 6 would happen and there'd be hundreds if not thousands of people storming the US Capitol? Of course not. I didn't think that that was possible that I think that people would ram planes into the World Trade Center, and the World Trade Center wouldn't exist anymore. Of course, no, I didn't think that if you go back to World War Two, World War One, you know, the World War One and Archduke was assassinated, and that started a series of events that lead to millions of people being killed or displaced.
There's plenty of possible things that can happen. But you have to make decisions based on things that are probable, and probable is something that both sides would agree on. And so going back to the wolf thing, if all you do is is, is feed yourself with one side, and you just you know, the one side that just supports what you believe in, you're not getting the full story. And so you're probably getting, you know, what is possible, more often than what is probable. But if you have both sides, kind of giving the same narrative, then I think you've leaned more towards that probable side of things.
And that's my job on a day to day basis is to - you know, it's funny, I was just asked this question, how much how much time do I spend meeting with clients versus reading and trying to keep up on the news events and the market events, and it's probably about 50/50. You know, 50% of my time on a day to day basis is reading stories and trying to, you know, kind of kind of sift through all of the information that we currently have to try to figure out what is probable, what is possible. And, and that's really what it comes down to when I make decisions with a lot of money that people have clients have entrusted me with, based on probable things, not on possible things.
So when I have clients who reach out to me and say, you know, what do you think of this story? My friend shared it with me. More often than not, it's a possible thing, not a probable thing. I do the due diligence. I do you know, with that specific story, that that specific story about the fertilizer in Ukraine, you know, I did do my due diligence on it. But at the end of the day, it was more of a I put it in the camp of more of a possible thing, as opposed to probable thing and it goes both ways. So please don't take this as me beating up on the Conservatives because, you know, when Trump was elected, I had a handful of clients who are on the liberal side that said that Trump was going to lead the nation into a terrible state. And the stock market did great with Trump up until the pandemic but but but yes, you know, the for three years the stock market did very well in for those clients. that did pull money out of the market thinking that Trump was going to be, you know, I did actually have one client, call him the next Hitler, you know that that - they would have missed out on that had they pulled their money out.
So again, I go back to the parable, the two wolves, it all comes down to what you feed yourself. And you should always stay informed. I’m not saying - please don't take this as me saying don't be informed. But don't constantly barrage yourself with the sky is falling, because those are my clients that are the anxious ones, the panicky ones, and the ones that are most likely to sabotage a lot of the work that we've done over these years with them, because they get, frankly emotional about what's going on based on the fact that they continue to feed that negative wolf instead of really trying to feed the more positive, the more positive wool.
So again, a little bit of a philosophical message for you today. But it really is important to you know, just like we give a lot of grief to teenagers and how social media impacts them. Don't fool yourself. It is just as addictive and just as intoxicating to older people, just as much as it is to younger people. I would even go so far as to say that, in some cases, if you're retired, and all you're doing is forwarding these things around to people and watching all this negative news and just filling your brain with it. You don't have things like school and friends and going out to parties and things that, you know, some of the kids have. You are truly feeding that wolf exclusively with social media and news network content. And I would argue that that has made a good, I shouldn't say a good chunk, but tens of thousands if not hundreds of thousands of people very angry and very anxious. Whereas just a few short years ago, they were nothing like that, but they've just kept feeding that wolf. And that that evil wolf is winning.
So don't let the evil wolf win. You know, surround yourself with things that are much more positive and feed you emotionally in a positive way than continuing to submerge yourself in all of this negative news.
So thanks for listening to my billet and philosophical talk. This is all about behavioral finance and trying to help clients make good decisions with their money and try to help them to avoid making poor emotional decisions because the emotions that always sabotage their reasoning. Thanks again, have a good day.
Brendan is the Managing Director for Waymark Wealth Management. He has extensive experience in comprehensive wealth management. His focus includes retirement planning, behavioral finance, investment portfolio construction, education funding, insurance & risk management, taxes, charitable giving, and estate planning. Brendan has an ability to take clients' complex visions and distill them down to simple action plans, helping them move from where they are today to where they want to be tomorrow.
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