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How to Think About the Past and Future

Tess by Tess
February 19, 2023
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How to Think About the Past and Future
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What Goes Up Quickly Comes Down Quickly

We live in a society that encourages instant gratification.

We want everything to be fast. Make big money quick, get quick results for a better body, or improve your exam scores in no time.

But more often than not, what goes up quickly comes down quickly as well.

When it comes to taking care of our health, quick diet plans and instant-results exercise routines are often unsustainable in the long run. 

And in terms of investing in companies, sustainability is key. This is true both in terms of the sustainability of the company’s long-term profits and the sustainability in terms of your time in the market. As the saying goes, “The money is made in the waiting.”

What we often fail to realise is that in health, as in the stock market—and in fact, in many aspects of life—time is a critical concept. We often want things to be fast but in reality, they often take time. And sustainability is so critical precisely because good things take time.

When we try to rush things, we invariably wind up making sub-optimal decisions because we fail to recognise the role of time in compounding—whether in health, wealth, or learning.

How can we think about the concept of time in our lives and avoid making suboptimal decisions?

Sections:
I. The Accumulated Nature of Health and Wealth

II. Embrace the Past: Retrospection

III. Imagine the Future: Prospection

IV. Food for Thought

The Accumulated Nature of Health and Wealth

Wait, don’t overspend now—you’ll enjoy greater wealth later. 

Wait, don’t smoke now—you’ll enjoy greater health later. 

Wait, don’t drink sodas now—you’ll enjoy greater health later. 

But not being able to enjoy all these things is painful.

People cannot see the accumulated nature of wealth and health, because the effects are not obvious now. 

This is known as present bias, or hyperbolic discounting. We rather settle for a small reward now than for a larger future reward. The value of the future is discounted way too much.

Embrace the Past: Retrospection

The past. We were told not to dwell on it.

But thinking about the past can give us a sense of meaning and connection to others. 

Nostalgia, defined as a “bittersweet but predominantly positive human emotion” gives us a sentimental feeling as though we are transported back into the past and reliving it.

Thinking about the past also helps us to better plan for the future. 

When investing, one of the most valuable things you can do is to keep an investment journal. It allows you look back on your past investment decisions to help you make wiser decisions in the future.

During the market drawdowns in March 2020, due to the massive selling and negative economic outlook, some may be crippled by fear choose to panic sell stocks. We let our emotions take over our rational thinking.

Penning down the reasons why you bought a stock helps to remind you of your conviction. If the business fundamentals remain the same or became stronger, and there are no better opportunities in placing your investment elsewhere, don’t let the noise in the market cause you to make irrational decisions such as panic selling.

To make better choices, we sometimes have to look backward. During future market drawdowns, look back at your investment journal and hopefully, you will learn from past successes and mistakes and be in a more advantaged position to allocate your capital wisely. 

Imagine the Future: Prospection

“Like nostalgia, the highest function of the future is to enhance the significance of the present.” – Daniel Pink, When The Scientific Secrets of Perfect Timing

Apart from looking back in time, looking forward to the future (prospection) also greatly influences our decision-making process, even in our language.

Broadly, language can be classified into 2 types, those with a strong or weak future tense. A language like English with a strong future tense marks an explicit difference between the present and the future, as compared to one with a weak future tense (such as German or Mandarin).

For example, a German speaker predicting rain can say naturally in the present tense, Morgen regnet es which translates to ‘It rains tomorrow’. In contrast, English would require the use of a future marker like ‘will’ or ‘is going to’, as in: ‘It will rain tomorrow’. 

Also, if I wanted to explain to an English-speaking colleague why I can’t attend a meeting later today, I could not say ‘I go to a seminar’. Based on the English grammar, I would have to say ‘I (will go, am going, have to go) to a seminar’. Whereas if I was speaking in Mandarin, it would be quite natural for me to leave out any reference to future time and say 我去听讲座 (I go listen seminar), since the context leaves little room for misunderstanding. 

English forces its speakers to habitually divide time between the present and future in a way that Mandarin does not. Of course, this does not mean that Mandarin speakers are unable (or even less able) to understand the difference between the present and future. It is just that they are not required to attend to it every time they speak.

Studies found that in countries with a strong future tense language, people are:

  • 30% more likely to save for retirement
  • 24% less likely to smoke
  • Likely to comply with scheduled vaccinations

Why is this so? In countries with strong future tense (futureless language), people do not perceive their future self and current self differently.

Prospection is also a useful marketing strategy when it comes to financial services. For instance, showing people the age-advanced version of self increases the propensity to save for retirement. 

The key takeaway here is, do not distinguish your present self and your future self. 

Behave as if you are already living in the future. Set yourself up for success by building good habits today and shape your future.

Food for thought: How should we think about time frames?

The path to a life of meaning and significance isn’t simply to “live in the present”, as preached by mindfulness gurus.

Rather, we need to integrate our perspectives on time into a coherent whole.

By using prospection (thinking about the future) and retrospection (thinking about the past) in our lives, it will help us understand who we are, shape our narrative and discover our purpose here.

Additional resources:

When: The Scientific Secrets of Perfect Timing by Daniel Pink

The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets

Increasing Saving Behaviour Through Age-Progressed Renderings of the Future Self

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