There’s an old saying among market traders, “Buy the rumor and sell the fact.” The basic idea is that traders buy stocks, gold, or other assets based on expectations of good news coming out, but then often sell those same assets (to take their profits) when the good news actually comes out, particularly if it wasn’t quite as good as expected. (All of this happens in reverse if the anticipated news is bad—then markets “Sell the rumor and buy the fact.”) To those not familiar with markets it can seem confusing to see the market sell an asset upon the release of good news, but it’s all about expectations.
Market traders are not alone in reacting based on their
expectations—we all do that. Each of us has probably been disappointed upon
hearing good news that was not as good as we’d hoped, and been elated upon
hearing bad news that was not as bad as we’d feared. Regarding the latter, many
people adopt the strategy of purposely anticipating the worst so that bad news
isn’t so devastating when they hear it. To a large degree, what you expect can
determine how happy you are.
Unfortunately, it is easy to expect a lot—and even to expect
that things will continually be better. Our surroundings and experience make
such expectations natural and reasonable, but they also set us up for
dependence and disappointment. Twenty years ago, smart phones didn’t exist, but
today more than half of the world owns one and many feel they can’t live
without them. Thirty years ago, the Internet was being used by few of us, but
now it is ubiquitous and seems central to life. Jet planes give us access to
the world at a relatively low cost, but only became available 70 years ago.
Modern medicine, providing vaccines, antibiotics, and a wide range of
preventions and remedies only began developing 100 years ago. Air conditioning
wasn’t available—even for the rich—until the early 1900s. Street lights in
cities, a significant deterrent to crime, in addition to being helpful in
finding your way, did not become common until the 19th century. And 18th
century Edinburgh, Scotland was considered the “Athens of the North” for its
intellectual vibrancy, yet strollers had to constantly be ready for what
followed the call “Gardyloo,” as the contents of chamber pots (there were no
toilets, which is still true for almost half the world’s population) were
thrown out of bedroom windows onto city streets day and night. The list could
go on and on. Our expectations are based on these and other developments—and
the continual flow of new developments. We expect them to be part of our lives,
we feel like we need or even deserve them, and we feel cheated or wronged and lost
or helpless if they go away, even if for a brief period—like when we visit a
part of the world that doesn’t have them.
But a great life was possible before they existed and it is
still possible without them—any of them. By some calculations, John D. Rockefeller
was the richest man who ever lived, yet he had no expectation of many of these,
and so cannot have felt at a loss without them. That kind of makes you thankful
for what you have and that you didn’t live his life, doesn’t it?
And also,—and we all know this if we stop to think about
it—things are not always getting better and sometimes good things cease to be.
Newton’s Second Law of Thermodynamics implies that the disorder or randomness
of our world has a natural tendency to increase. And this doesn’t just apply to
physics—as much as we work to bring order to and improve things, the nature of
things is that our work will be undone: when we build or fix something, it will
ultimately break or wear out; when we weed the garden or mow the lawn, it will
need to be done again before long. Well designed systems, organizations, and
governments tend to become less effective if not continually monitored and
rejuvenated. And sometimes the decline is more sudden and violent—like a
natural disaster or the outbreak of war. For a wide range of reasons, many
things tend to become less organized and less efficient, and to decay and
decline—and the resulting reality will be less than we have come to expect.
None of this is a recommendation to set your hopes or
expectations low. You just need to remember that hopes and expectations are not
entitlements and rights. I, for one, have trouble remembering that in a wide
variety of situations.
Case in point: I’m a terrible golfer. The most I ever played
was when I was in graduate school in Scotland and it was really cheap, but it
never caught my imagination like it does that of some people. Anyway, when I
play every year or so I have a few good shots and I leave the course focusing
on them and feeling like I had some success. Sometimes, however, I have three
or four or even five good shots in a row and somehow delude myself in the
thinking I know what I’m doing. When that happens, my expectations change and I
expect the next shot to be as good as the last few. Inevitably and, usually
quite quickly, I am disabused of that notion. And then, if I don’t catch
myself, I’m very frustrated and even mad, which is ridiculous because, as I
said at the beginning, I’m terrible golfer. Yet expectations can change quickly
and sometimes without good reason. And when they do, they set you up for
disappointment. So, with golf, anyway, I try to remind myself to appreciate the
good shots and not expect any more.
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