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_{Exploring temporal discounting, FOMO, and global optimums}

Happy Thursday! Thanks for reading Intentional Dollar — where we look at old money ideas through a new perspective.

What’s inside?

• One tool to experiment with

• Two quotes from others

• Three questions to dig deeper

• Four lines of poetry for the point

Disclaimer: This is not investment advice. These weekly posts represent my simple thoughts, a few quotes, and some questions — for educational purposes only.

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_{One tool to experiment with:}

Temporal Discounting:

James Clear said, “Our preference for instant gratification reveals an important truth about success: because of how we are wired, most people will spend all day chasing quick hits of satisfaction. The road less traveled is the road of delayed gratification.”

This illustrates why most decisions made and dollars spent are coerced by impulsive feelings thumping impatient fists on our front doors. 

Our brains prioritize action based on how we feel now, not later. And most of the time, the pains we feel or values we receive today appear greater than the rewards to come. As a result, we discount the negative future consequences of bad action, and we discount the positive future consequences of good action. 

Married together, this bias toward the present, or temporal discounting, aids us in making the suboptimal choice. 

Hungry? Eating fast food is a quick solution to this present pain. The negative health consequences are too far to see, squished with our mind, so we elect the fast food decision. 

Stressed? Smoking a cigarette now offers immediate relief. Our minds use temporal discounting to make the negative health consequences seem small. 

Looking to invest? Trading offers a chance at a faster reward than investing — but often with increased risk, orders of magnitude more. 

Debating working out? You pay the frictional cost of discomfort and exertion now, and receive the health benefits down the road. An easy debate to lose as we discount the delayed value. 

Temporal discounting is bad but becomes lethal when we pair it a “contract” with our future selves. We’ve all verbally committed ourselves to a tomorrow contract:

• I’ll make my own coffee tomorrow

• I’ll sign up for the class tomorrow

• I’ll open the investment account tomorrow

• I’ll start working out tomorrow 

• I’ll ask for help tomorrow 

• I’ll do the dishes tomorrow

• I’ll get up early tomorrow 

The tomorrow contract + temporal discounting is equivalent to building a quicksand pit in your backyard and platform diving directly into it. If you want to get stuck, that’s your prescription. 

These forces innately make it difficult to do the right thing right now. 

Since your mind tricks you, you have to be willing to play the same game. How can you trick yourself to correctly value the true long-term rewards? 

I think it helps to carry a few simple questions: 

• Will this provide gratification or fulfillment? 

• Does this advance my long-term objectives?

• Will I regret this five days, five weeks, five months, or five years from now?

_{Two quotes on FOMO:}

Fear of missing out comes from a lack of contentment with present circumstance. If you like your lot, it doesn’t matter what someone else got. 

_{Three questions on global optimums:}

1. What if I’m optimizing the wrong thing?

2. Is this a local optimum or a global optimum?

3. What if I’m productively procrastinating? Making progress on the wrong thing, further fueled by visible progress?

Which question stuck with you? Questions like these are spotlights for the mind. Reply to this email and let me know which one shined light on a previously dark cave.

_{Four lines of poetry for the point:}

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Content ideas, questions? Reply to this email or reach out to me at [email protected]

Disclaimer: This is not investment advice. These weekly posts represent my simple thoughts, a few quotes, and some questions — for educational purposes only.

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