Seduced by Homo Fictus

We are addicted to stories. Stories are so fast they can outrun reality.

Even in our sleep we tell ourselves stories. The term “Homo Fictus” explains it best. This is the name given by Jonathan Gosthaldt in his book The Storytelling Animal, explaining how humans are simply primates trapped in Neverland. Our minds will travel the world during the day, night, sleep, work, or at play. It does not matter how hard we fight, we always will succumb to the seduction of story.

The best storytellers lay the framework; we fill in the blanks. A writer only creates the words; our mind is the director that brings these words to life. But it is not just our story that excites us. We get equally emotional when we see others experience something we thirst for. We feel the joy of winning a championship even though we are not a player on the field.

After studying the brain for five decades, Michael Gazzaniga unfortunately concludes that the storytelling mind is “allergic to uncertainty, randomness and coincidence.” The mind defaults to the best version of us by creating its own variant logic, one that sees us as prettier, more handsome and more in control than reality will confirm. Everything has a reason and if one is not readily available our brain will create one. This creates a real challenge when we seek to invest well.

Buyers and sellers in the market place invest for their own purposes, not yours. Their collective wisdom dictates prices. But with so much persuasive commentary in financial media, it’s too easy to hear only what we want to hear, just like when we see Snoopy in the clouds above. Our brain concocts the most amazing reasons why a stock changed in value, why interest rates dropped or why the economy will succeed or fail. Watch CNBC just 30 minutes and you will see no less than 10 people fabricate fiction based on complete randomness. It is not that they are bad people intent on deceiving us because they are deluding themselves as well. They really believe what they say. But here’s the thing; they don’t suffer when their story turns up false, you do. So it is up to you to defend yourself against the seduction of story. We have to train our minds to spot the patterns of certainty, confidence and neglect of the unknown. When we see someone walking that tightrope, we now know they live in fantasy worlds much like JM Barrie and JK Rowling.

Thankfully in the end, we can actually benefit from the power of story when we plan our financial future. And the story goes something like this. Once upon a time a wealthy investor ignored the marketplace noise and decided to invest based on common sense. This investor finally understood they’d won the race and made a promise to now enjoy life. He then located a candid financial advisor who would tell him what no one else would. Together, they created perpetual income to cover the family bills forever and lived happily ever after. The End.