AKA FOMO

Do any of us really make sense?

There is a concept in economics upon which many beautiful theories rest, that of the “Rational Man.” This so-called rational man does exactly what his name indicates – he behaves rationally. Always. And particularly when it comes to economic decisions. And just so we are clear, he doesn’t have to be male, as we are all presumed to be rational men, even the women among us.

There’s a slight problem with Mr. Rational, however. He doesn’t exist.

In reality, he’s actually known as Economic Man, and he’s an idealized human being who acts at all times rationally and with complete knowledge, seeking to maximize personal utility or satisfaction. In other words, my rational man always makes the smart choice. And because he’s a myth, many economic theories that depend on him are basically garbage. Like the Efficient Market Hypothesis. [Modern economic research in the field of behavioral economics has established this point as well. I’m clearly leaving out a lot of details here for the sake of relative brevity, but if you know anything about the subject, you know that the errors contained in my broad-brushed statement would take more lines to correct than it’s worth for the purposes of this blog post.]

Yes, rational man is in reality often emotional, illogical, and decidedly irrational. He does stupid things that seemingly move him farther away from his goals, hurting him in many ways – including but not limited to financial ways. This irrationality is the reason why you see so many people making so many obviously stupid decisions, both in their personal and their financial lives. They’re just doing what actual, non-idealized human beings do. Think playing the lottery (a negative expectation activity) or being harsh to a loved one who is trying to help you with a problem.

From the outside looking in, it’s obvious that what they are doing is just plain counterproductive, and at times even destructive to themselves or others. The people may even clearly acknowledge that they are being irrational. Yet they can’t or won’t stop. Is there anything more irrational than behaving irrationally, knowing that you’re doing it, and continuing to behave irrationally? Methinks not. It doesn’t stop our Rational Man.

Am I a Rational Man?

Many people regard me as being very rational. Certainly more rational than average, and likely far more than average. I’m an analytical thinker with a Ph.D. in theoretical physics and many years of experience in various aspects of finance and business. I’m very cautious in my financial decisions, like how I spend my money. I do a lot of things that make a lot of sense. If anyone “gets it,” it would most likely be me.

The reality, however, is that I’m just as irrational as the next guy. I may disguise it better than most, especially by restricting it to certain areas of life that might attract less attention than some of the more glaring irrationalities that are on display all around us, all the time. But I’m actually a very emotional person, and my emotions drive my behavior far more than I’d like. At least, it’s far more than I’d like when they’re driving my behavior in a counterproductive direction.

I sometimes look at the situation surrounding my emotionality as a weakness, something to be ashamed of. It’s the kind of personality flaw that’s ok for other, inferior people to be saddled with, but not for a *superior* person like me. It must be hidden, ignored, and eradicated. I’ve known about this very human weakness of mine for many years, but to date I haven’t succeeded in making it go away. In other words, I have been unable to make myself a robot version of a human being.

FOMO

There’s that term you saw in the title of this post: FOMO. For those who aren’t familiar with it, it stands for Fear Of Missing Out. It’s a fear that has always been there, we’ve all suffered from it our entire lives in one form or another, and it seems to have become more prevalent in recent years thanks to “advances” like social media and instant communication.

Everywhere we turn we face the pain of seeing people doing the same things we’re doing, but doing them better. Or even more painful is that they’re doing things that we’re NOT doing, and their things are somehow always inherently better than our things. The classic example is friends constantly posting pictures on Facebook that make their lives look perfect…and certainly MUCH better than your sad, boring life. You’re missing out on all the fun. Maybe you should go into debt to finance a lifestyle more like theirs. Then you would be happy.

Another example that addresses FOMO perfectly is the cryptocurrency craze that hit full fever pitch during the last couple months of 2017. Most people knew nothing about crypto before then. Sure, many had heard the term “Bitcoin,” but that was as far as it went. Then all of a sudden they started hearing stories about people no different from them who had made millions simply by buying a small amount of bitcoin or other cryptocurrency and then watching it skyrocket by tens of thousands of percent, nearly overnight. Worse yet, what if they actually knew someone who had experienced this life changing financial miracle?

What’s the first thing that goes through your mind when you encounter OTHER PEOPLE making easy money, while you’re not even in the game? Describe it however you want, but I don’t think you can find a simpler or more correct way than simply saying FOMO. You don’t want other people getting rich while you sit by and MISS OUT on all the fun. In fact, you FEAR this kind of missing out.

You’re experiencing FOMO.

You instantly ignore the fact that you know nothing about cryptocurrency, and that your financial situation is such that you may be ill able to afford risking money in an instrument that’s incredibly volatile, unregulated, and swimming in a sea of scammers and hackers. No, all you care about is the fact that you absolutely must get someone to show you how to buy, buy, buy!!

And that’s exactly what happened in November and December of 2017, with the buying frenzy driving the price of cryptos even further through the roof. Everyone felt rich and very, very satisfied with life. For a couple of weeks.

The sheep had willingly walked into the slaughterhouse. In fact, they had pounded on the door and demanded to be let in. And they promptly got slaughtered when the smarter money raced for the exits, banking huge gains and causing prices to plummet. People who had just recently bought cryptos thanks to FOMO, expecting easy and instant riches, lost billions. Many of them had bought on credit assuming guaranteed profits. Instead they were saddled with having to pay back huge debts on credit cards or second mortgages they’d incurred mere weeks before – at the moment FOMO took hold of their brains, that is. You probably know the rest of the story.

Why do we experience FOMO? There are many different pieces of the puzzle, and while I don’t pretend to know them all, I believe I can illustrate the point rather well by digging into a particular manifestation. The manifestation that is dramatically impacting me and my life is the FOMO I have when it comes to the idea of slowing down or stopping my vagabonding lifestyle!

FOMO for Vagabonds

You’ve heard me talk about it for several years, and a few of you have engaged closely with me on it, for which I am very thankful. (If you think I’m referring to you in that statement, I am.) I am very clear that I want to spend more time in just a couple of places, effectively having a home base or two. The benefits are obvious in terms of lifestyle: finding a good gym, yoga studio, bicycle, stable friends, possibly girlfriends, etc. After 9 and a half years of virtually nonstop movement of the vagabonding variety, it is time for a change of pace.

I swear to you that I really want to slow down. My rational mind knows it’s the right thing to do. For several years I have been articulating to myself and others in detail the reasons why it’s obviously the right thing for me to do, and even what I’m missing out on by NOT doing it. Yet I haven’t done it. It apparently hasn’t mattered how obvious it is, or how rational such a move would be – even to the mind of a supposedly rational guy like me.

The fact is, I have a fear of missing out on whatever the next great place or great adventure is. If I stop moving, someone else might end up having more fun than me, whereas if I keep going, there’s at least the chance that I’ll find paradise in an as-yet unknown location or activity.

Exactly why it is important to me that someone else might end up having more fun than me, and thus that I should make sub-optimal life decisions based on that possibility, may seem unclear. I have a pretty good idea, though. It’s strongly related to a topic I’ve addressed frequently, the tyranny of choice. As long as I’m vagabonding I have total freedom, thanks to the infinite choice of where, what, how, and when. And thus, if the mythical “someone else” who continues to vagabond has the chance to experience nirvana due to continued movement…then as long as I continue moving, I have that chance too.

For someone seeking joy and satisfaction, this would actually be a fairly rational perspective – if I didn’t already understand the concept behind the tyranny of choice, which is that having more choices is not necessarily the good thing it might seem at first glance. Instead, having many choices leaves our brains endlessly pondering the possibility that, no matter how good a choice we make, one of the many other available choices might have been better. And we end up dissatisfied no matter what we choose.

What’s even worse than this tortuous pondering is the fact that no matter how long we ponder it, we will never know if indeed there was a better choice than the one we made. And hence, knowing this, we don’t want to make a choice in the first place. So we put off the decision through procrastination and endless agonizing, even with seemingly simple decisions. It’s exactly the mechanism that has made it so hard for me to settle down out of fear that some other vagabond who continues moving might have more joy than me. I don’t know if the other guy actually will, but I’m afraid to make a choice that seemingly prevents me from at least having the same chance of nirvana he does.

Forget about the fact that my nirvana might be in the place I choose to settle down, and that neither he nor I knows who will end up with the “better” result. I understand all this…on an intellectual level. And if I were truly a rational man, that would be the end of the story. I’d pick a place, settle down, and see how it goes – knowing that if it really goes poorly, I can pick a different place. Or even start vagabonding again.

But coming back to how I started this post, the Rational Man doesn’t exist. The Emotional Man, however, very definitely does. And it’s the emotion of fear that has been driving my behavior in the area of location/lifestyle decisions for the past 3 years or more.

Emotions

Emotions are a funny thing. It’s easy for analytical people like me to want to believe they are a dangerous hindrance to our lives, driving irrational and potentially damaging behavior like FOMO. It’s obvious that my emotions in this area are having a negative impact on my life at this very moment. Yet while we’re both physicists, I’m no Sheldon Cooper from the Big Bang Theory TV series. I recognize very clearly that emotions are what make us human, and attempting to shut them off is a terrible idea, even though I’m guilty of having tried (highly unsuccessfully) to do so at various times in the past.

The greatest things I’ve ever achieved or experienced have been due to emotions. It was emotion that fueled my drive to be the best and win in lots of athletic activities. The discipline required to do difficult things doesn’t come from being a robotic replica of a human being, it comes from having a deep emotional drive to accomplish something. It’s where motivation comes from. It’s how we make sacrifices that might otherwise seem too difficult to even contemplate. It’s the love of parents for their children that drives them to work long and hard, sometimes in horrible circumstances, to provide the food, clothing, and shelter that children need to survive.

I’ve seen this phenomenon frequently in 3^rd world countries, where many parents work long hours, 7 days a week, to earn just barely enough for their impoverished families to scrape by. These difficult and painful sacrifices are driven mostly by love. And the last time I checked, love is an emotion.

No, emotions are at the root of all the great things in life, just as they are often at the root of so many of the bad things. I wouldn’t wish for the removal of my emotions, even though I know they sometimes cause me to take actions that don’t serve me as well as a purely rational action might. Emotions give texture to life. The challenge is finding a way to modulate them so they work primarily for my benefit, rather than my detriment. And that’s what I’m grappling with at this very moment. Awareness is an important first step. But in and of itself, awareness is not a solution. I have the awareness. Now it’s time for a solution.

At the moment I’m in Luxembourg. For the second straight year I have been here for Luxembourg Day, which is today. It’s their national day, which doesn’t really stand for anything other than an excuse to celebrate Luxembourg. I left here the day before the holiday 2 years ago, and last year I got to experience it, as I did again this year. They do a huge fireworks display, which was really good last night. It was perhaps the best I’ve seen, excluding the unbelievable one I saw on the beach in Rio de Janeiro on New Year’s 8 and a half years ago. This picture I took last night isn’t an attempt to do justice to the display, but rather a placeholder to remind you of what fireworks look like:

Luxembourg Day – It evokes images of the 4th of July in the USA

I am heading back to Portugal in a few minutes to re-engage there with the possibility of making it a longer-term place to settle, which I began in April and May. There are no guarantees of anything, as I still have a lot of global travel coming up this summer for various business activities. And I also have family events going on in the States. So I’m going to do the best I can.

My true goal is to harness my emotions and focus them to help drive my best to be much better. Rational Man certainly hasn’t been getting it done. Maybe Irrational Man, aka Emotional Man, can come to the rescue. He may not hit a home run the first time up to the plate. But if he can at least mange to stay in the batter’s box for the full at-bat, it will be a great step forward.