Biden will be our next President because Americans want things to go back to "normal."

People don't like change.  They worry that the change will be for the worse and that they will lose something in the process.  So "loss aversion" kicks in.  (see this blog -- http://pjlehrer.blogspot.com/2020/02/whats-driving-your-investment-strategy.html)

That's why if you do want to change, you need to do it in small sustainable steps.  A little bit at a time.  The same way that you would taper off an addictive medicine.

While the minority who put Trump in office wanted change, the other 70% of America did not.  And one wonders now if even Trump's supporters have grown weary.

When faced with too much change people resist.  And when they can, they go back to the way things were before.

So it wasn't surprising that Biden has emerged as the Democratic candidate for President.  And that when asked why they were supporting him, people said that "they wanted things to go back to normal."

And that is why he will win in November. 

Nuzzi, O. (2020, February 28)  'Biden Is Going To Kick Ass Here Because This Is a Normal Place."  nymag.com.  Retrieved March 11, 2020, from  https://nymag.com/intelligencer/2020/02/bidens-south-carolina-base-finally-has-reasons-to-believe.html

What's driving your investment strategy? FOMO or loss aversion?

The Dow Jones dropped 1,032 points on Monday and 879 points on Tuesday due to concerns about COVID-19.  It seems logical that a slowdown in activity would negatively impact the global economy.  And since things were already heading downhill last year - GDP growth in 4thQ was 2.1%, before corrections which generally lower it significantly - we are not well poised to withstand a downturn.

So investors have to decide what motivates them more.  FOMO or loss aversion. 

We are hard wired to fear change.  And we hate to lose more than we like to win.  It's called "loss aversion."  In their seminal study on Prospect Theory in 1992, Tversky & Kahneman identified a two to one ratio.  Meaning that we hate to lose twice as much as we like to win. (Tversky & Kahneman, 1992)

On the other hand, we also hate to miss out.  That's why sales of tickets for Broadway shows soar after they announce their pending closure.  So that's where the FOMO comes in.  A move to safer investments could mean losing out if the stock market continues to climb.

So the question is which of these opposing forces will win out.  I'm betting on loss aversion.  How about you?

Tversky, A. & Kahneman, D. (1992) Advances in Prospect Theory: Cumulative Representation of Uncertainty.  Journal of Risk & Uncertainty.  Retrieved February 25, 2020, from

http://psych.fullerton.edu/mBIRNBAUM/psych466/articles/Tversky_Kahneman_JRU_92.pdf

Are curated collections the solution to too many choices?

Decision-making is hard work.  The more decisions we make, the more tired we get.  Eventually decision fatigue sets in we make poor choices.  Like reaching for a candy bar.

The internet with its endless volume of options has made things even worse.  I spend hours researching everything I buy and then still wonder if I have missed the perfect choice.  Because that's what it's all about - FOMO - fear of missing out. 

And since negative emotions are more powerful than positive ones we are all about "loss aversion," i.e. avoiding a decision that will make us feel bad.

Enter companies that are making it easier for us by offering fewer options.   Saatva offers five varieties of mattresses in standard sizes.  They also conveniently label one - best seller - for those of us who are looking for help from others to make our decisions.

It's an excellent idea.  And it probably benefits the company as much as the buyer since it limits the amount of merchandise they need to stock.

The idea seems to be catching on.  Especially among DTC (direct-to-consumer) brands.  Kitchenware maker Great Jones offers only five products. But they do come in five very instagramable colors including Blueberry and Earl Grey.   

Sounds good to me, how about you? ;-)

Joutz, M. (2018, November 12)  Get a Handle On Your Pots and Pans.  nytimes.com.  Retrieved July 10, 2019, from  https://www.nytimes.com/2018/11/12/style/millennial-cookware-dutch-oven.html

If you want to be happier buy yourself some time.

While many people believe that money buys happiness.  Research shows us that this is not entirely true.  It is actually the lack of money that buys unhappiness.  And, once you reach $75K a year in household income, additional income doesn't impact happiness as much as it does below that threshold.

What does increase happiness is buying time.  The ability to spend time on the things that you enjoy is priceless.  So it makes sense that buying time by outsourcing tasks, hiring help, and splurging on the occasional taxi makes people happier. (Blackman, 2014)

I learned a long time ago that I am better off paying someone to put together my Ikea purchases than doing it myself.  It's all a matter of considering how much time a task will take and then deciding how much your time is worth. 

But reallocation of time is not money dependant.  Sometimes it's just a matter of tuning in to where your time is going and making adjustments. 

For instance, when I want to buy something these days, I get lost for hours on the internet.  FOMO and my personal need for thoroughness cause me to waste far too much time looking at endless options.  Moreover, the more options you have, the more difficult the decision.  So it becomes an incredible time suck.

My solution is to put a time limit on my searches.  Say, an hour to look at rugs.  That seems like a reasonable amount of time to devote to the task.  And, it buys me time to do something I enjoy more.

Why not give it a shot?  It might work for you too.

Blackman, A. (2014, November 11) Can Money Buy You Happiness? wsj.com.  Retrieved February 14, 2018, from  https://www.wsj.com/articles/can-money-buy-happiness-heres-what-science-has-to-say-1415569538