Your Caveman Brain Is Bad at Math

My son Chris just got back from his five-day-long senior trip to Boston. His senior class is a small one, only 24 students with eight boys, so it was a pretty tight-knit group. By his account, one day they walked for eight hours, taking in the city's historic sites. They hit an Asian restaurant at some point, and he had strong feelings about the egg rolls. Not good, apparently. And that, my friends, is basically all the information I was able to extract from a teenage boy about his trip.

I only have one more month of the school drop-off routine, and I cannot tell you how ready I am. The traffic, the lines, the whole production. I don't wish it on my worst enemy. But the end is in sight. Next year, my oldest son heads off to college, my middle son will be 16 and driving, and he can take his younger brother to school. A new era is coming, and I am here for it.

On the home front, I've been putting finishing touches on what we call our 'basement,' a detached garage we air-conditioned and turned into a family hangout space. I recently added a dart board and a ping pong table, and honestly, we're on the verge of a full-on rec room. What do you think we should put in next?

Scenario #1: The 10% Drop

Scene: A quiet kitchen. The husband stares at the laptop as if it had just insulted his mother. The wife sips her coffee, unbothered.

Husband (clutching coffee mug like a lifeline): This is bad. This is really bad.

Wife (barely looking up from crossword): Oh?

Husband: We’re down ten percent! Ten percent!

Wife: From what?

Husband: From everything!

Wife: Uh-huh. So, what’s the actual number?

Husband (squinting at screen): Well... we were at $500,000. Now we’re at $450,000.

Wife (calmly sipping coffee): Okay.

Husband: Okay?! We just lost fifty grand! Fifty. Thousand. Dollars.

Wife: So don’t check it every day.

Husband: That’s not helping either.

Wife: You know, I was reading about this yesterday. People feel losses twice as intensely as gains. It’s called loss aversion. It comes from when we were cavemen. If a caveman loses his only spear, he might starve; if he finds an extra spear, he just has a spare.

Husband: Oh, I feel it. I feel that spear right in my chest.

Wife: You know what Dave says. In a few years, no matter what it does daily, you will look back and say, "Hmmm. That wasn’t so bad. My portfolio did fine overall."

Husband: That doesn’t make me feel better.

Wife: Would it help if I baked my famous blueberry pie?

Husband (pause): Maybe.

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Scenario #2: A 10% Gain

Same kitchen, different season. A new headline flashes on the laptop screen.

Husband (peering at laptop cautiously): Huh.

Wife (chopping vegetables): Huh, what?

Husband: We’re up ten percent.

Wife: Well, would you look at that.

Husband: We’re at $550,000 now.

Wife: Lovely.

Husband: That’s it? Lovely?

Wife: What do you want me to do, throw confetti?

Husband: Well, I mean… when we lost ten percent, I nearly had a heart attack. This is the same amount, just in the other direction. Shouldn’t it feel… I don’t know… amazing?

Wife: Should it?

Husband: I guess so. But it just feels… normal.

Wife: Yep. It's that old caveman brain again.

Husband: So what do we do?

Wife: Stop staring at it every day. The market goes up over time. Dave has been saying this every week for over twenty years. Temporary volatility due to uncertainty in the world happens all the time.

Husband: So you’re saying… I should just let it be.

Wife: I’m saying let’s eat dinner and not turn our kitchen table into a therapy session for our portfolio.

Husband: Fine. I’ll allow myself mild enthusiasm.

Wife: Atta boy.

Be Blessed,

Dave