On Loss


I hate losing things.

Every winter, the whole family gets cabin fever. Thank God my wife is responsible enough to get us out of Dodge, at least for a weekend, to feel the sun. This year, we went to Fort Lauderdale.

Our first day at the beach is near perfect. Bright sun, no clouds, but lots of wind. That means rough surf. I should know better, but I leave my Oakley sunglasses on when I go in for a dip. I am apoplectic when a rogue wave knocks them off.

I love Oakley. It’s the only brand of sunglasses I wear. No other pair of glasses, and I’ve tried most, make colors pop like a pair of Oakleys with Prizm lenses. They’re so good, I wear them when it rains. Grass and leaves pop like emeralds. It’s like viewing the world in high definition.

I duck under the water and feel around. Nothing.

The waves are coming in hard and on an angle. I know if I don’t find these glasses soon, they’ll be gone forever. I walk in ever-expanding loops from the scene of the crime, groping with toes, hoping the red lenses will stand out in the churning surf. Still nothing.

Where are those kids with goggles when you need them? A few strangers see me looking around and join the search party. After another minute, I feel bad for my new friends and call off the search.

But I don’t give up. For the rest of the afternoon, I compulsively stalk the shoreline for dozens of yards in each direction, hoping the waves carry my Oakleys back to me. I’m miserable. Nothing is real except my loss, and it consumes me.

I’m at the beach in March! The sun is shining. The kids are running around having a blast. And all I can think about are my dumb sunglasses.

Why Do We Do This to Ourselves?

I don’t think my experience is unique. People don’t handle loss very well. Psychologists have studied this phenomenon for decades. It’s called loss aversion, and it suggests that we feel the pain of a loss far more powerfully than the pleasure of a gain. For me, the loss of the glasses was more acute than the pleasure of being on vacation.

May was a rough month for markets. A couple was in the office for their annual review. The wife told me her husband was giving her daily updates on the money they were losing in their retirement accounts. He was driving them both crazy.

I asked the husband if he had given daily updates on their gains when the market had an incredible run from January through April. He sheepishly admitted that he hadn’t. In his mind, the losses were more remarkable than the gains. We’re hardwired to think this way. And it’s psychological poison.

I finally got around to swapping my winter and spring coats. The first time it rained, I donned my windbreaker and discovered an old pair of Oakleys in the pocket. What a find! I was thrilled to be reunited with the shades I hadn’t even realized were missing.

That’s when it struck me. You can only feel the pain of a loss when you know there is a loss in the first place. Sometimes ignorance truly is bliss.

Control What You Can Control

Stop checking your account balances. Get a plan and stick with it. There will be ups and downs, but if you’re none the wiser, the bad days can’t affect you. And if history is any guide, when you do check in, you’ll inevitably have more than the last time you checked. It’d probably feel about as good as finding your favorite glasses in your pocket.

You can’t control the market, but you CAN control how often you subject yourself to loss aversion. Look around you and enjoy your gains; the sun is probably shining.

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