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The Shock Cycle

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The Shock Cycle

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Posts: 22 since Mar 2020
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The Shock Cycle / Morgan Housel

At first you donít see bad news, because it starts small and isnít reported in traditional outlets. A few experts chat amongst themselves, but word has yet spread.

Then you ignore the bad news, because even once itís reported itís easy to dismiss if youíre not familiar with it. An unfamiliar threat is hard to distinguish from a threat that people are overreacting to.

Then you deny the bad news, because at some point you canít ignore whatís being reported but claiming the numbers are wrong or out of context is more comforting than admitting theyíre about to hurt you.

Then you panic at the bad news when you realize the threat is real and you need to make up for lost time. You compensate for previous denial with worst-case-scenario predictions to reduce the odds of being caught off guard again.

Then you start to accept bad news. Expectations are powerful, and people can adapt to bad news even when itís personally painful. A little bad news you didnít expect can feel worse than major bad news you knew was coming.

Then you donít see good news, because people are nervous to report optimism out of fear of looking oblivious. Good news can coexist with bad news, but when people are losing their jobs (or lives) you can appear reckless for discussing signs of progress.

Then you ignore good news because youíre once bitten, twice shy. Avoiding further downside becomes such a focus that you lack the mental bandwidth to even recognize good news.

Then you deny good news. Youíre so attuned to risk that you reflexively think good news must be wrong or out of context. Anyone promoting good news is criticized by the masses, who enjoy safety in numbers.

Then you realize you missed the good news. In hindsight you realize things turned a corner while people were most certain about how bad it was. You look back and canít believe how obvious it was that people were too pessimistic, and canít believe clear the signs of improvement were.

Then you accept the good news, realizing that risk has receded and you can once again enjoy the fruits of progress.

Then you abandon your attachment to bad news as good news dominates the media and optimism becomes socially acceptable again.

Then youíre right back to where you started.

And the cycle repeats.

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May 12, 2020

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