The year is 2031.

At a quick glance, what was the very first thing that came to your mind? Did you think about your health, wealth, career, elderly parents, your children or was it something totally different? Did you immediately feel intimidated, excited, nervous or were you distracted in the moment?

Back in 2011, a study by lead researcher, Hal Hershfield, Associate Professor of Marketing and Behavioral Decision Making at the UCLA Anderson School of Management, conducted a study to see how people see themselves in the future. In one study, people were put through a brain scanner and asked to think about 4 things. Themselves today, a stranger today, that stranger in 10 years into the future and themselves 10 years into the future. The participant’s brains lit up when they thought about their present-day selves however a lot less when they thought about the stranger. What was even more interesting was their brains did not seem to care much for their future selves.

According to Hal, #psychologically people do not identify with who they will be in the distant future. That future person seems almost like a stranger to them. Hal found himself researching a topic he thought he would never get involved in – retirement savings. He began studying the things that stop people from making decisions over the long run that could really help them. Ultimately, his research is trying to determine how can we help move people from who they are now to who they will be in the future in a way that maximizes well-being.

So, what exactly is the connection between this study and making investment decisions today or what can we learn from this study that will help us make better decisions with our investments? In my opinion, the answer is self awareness.

If you think about it, each time we face a disruption of status quo or an attempt to break our personal habits, we feel #uncomfortable or unnatural. Here is an example of what I mean. Do you remember the first time you came across an e-mail address including the “@” symbol? Back in the mid 90’s, the idea that you could send a letter across the world electronically rather than by mail was a major disruption. Upon the early stages of consumer adoption, many people viewed the “@” symbol as a strange method to communicate yet today we are numb to this concept. The same could also be said about companies like #Amazon, #Microsoft or more recently #Facebook. When these companies first appeared, many investors likely felt uncomfortable about the unknown or lacked vision of what they could become 10 years out. The connection I am trying to make between Hal Hershfield’s study, and the average investor is the following. If people cannot identify with who they will be in the distant future or view their future self as a complete stranger, how are they going to be able to identify a distant future investment opportunity in a different manner?

If people cannot identify with who they will be in the distant future or view their future self as a complete stranger, how are they going to be able to identify a distant future investment opportunity in a different manner?

What is this week’s takeaway?

The advancement in technology is happening faster than ever before and if you think that statement is slightly exaggerated, consider this. Did we talk about NFT’s, SPAC’s, #Ethereum, space travel, 3D printers, autonomous vehicles, cloud computing and artificial intelligence 10 years ago? Highly unlikely, right?

I understand that people for the most part will continue to have difficulties identifying who they will be in the future and that is probably not going to change anytime soon. However, basing our investment decisions on what we can only see today could be a mistake for the average investor.

If we want to be successful in the new digital economy, we need to invest in ourselves and our ability to adapt to change.

Only then will we bridge the gap between now and the future.

Have a great weekend!

Talk soon,

Michael