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Letting Go of the Backpack

Letting Go of the Backpack

December 08, 2022

Several years ago, a friend of mine was suffering through a nasty divorce that sent him spiraling into a dark place of self-doubt, confusion, and unhealthy rumination. Aside from the hurt feelings and sense of betrayal, he was most bothered by the idea that he had, in essence, been robbed. He couldn’t shake the thought that his ex had stolen his time, money, and resources, and sullied his reputation.

In talking things through with him, I offered an analogy. I likened him to a hiker who was under attack by a bear. The bear had grabbed him by his backpack, and his only chance at escape was to let the bear have it and run. The problem was, he was reluctant to give up the all the “stuff” he was carrying.

Let go of the backpack, I told him. Let go of what you’ve already lost, and the feeling that you’ve been cheated. Getting attacked by a bear isn’t fair, and it isn’t fun, but sometimes life isn’t fair or fun. Sometimes things get taken away from you. When that happens, you have to let go, focus on moving forward along the trail, and be grateful for what you’ve got.

Well, I had a backpack incident of my own a few months ago when I took my 6-year-old on a father-son trip. It had been a long day of travel when we touched down at the airport on our way home, and as we got off the plane, I set my backpack down at the gate to adjust his car seat. It wasn’t until we exited the terminal that I realized my backpack was missing. In my haste, I had left it at the gate, and due to the airport’s re-entry protocols, it was too late to go back and get it.

Better than a bear attack, I suppose.

We’ve all had the experience of being forced to let go of our backpack, whether literal or figurative. To avoid getting mauled by a bear, we have to surrender something of value, as well as our mental preoccupation with that valued object. And make no mistake: letting go of the backpack is never, ever easy.

This year, investors have been under attack by a bear – a bear market, that is. We’ve experienced the pain of loss in our portfolios. We’ve struggled with feelings of fear and frustration. The bear’s got us by the backpack, and it’s our choice to hold on to our hurt, or to let go and keep moving forward.

To be clear, in this analogy, the backpack is not your investment portfolio. Generally speaking, letting go of your holdings in the middle of a bear market is not a good idea. Rather, the backpack represents the feelings of security, confidence, and comfort that we ascribe to our previous financial standing relative to the uncertainty of the current moment. That impulse to compare where we are to where we were is hard to abandon.

One of the basic rules of Behavioral Economics is that losses feel worse than gains feel good. Our brains are wired to cling to our backpacks. However, long-term investing is much like a long hike. Along the way, there will be thrilling views from mountain peaks, and there will be times when the mountaintop seems impossibly far away. To reach your destination, you must be psychologically and emotionally prepared for both sets of circumstances, neither allowing yourself to get too high nor too low. At all times, you must be resolved to keep moving forward. And if a bear grabs you by the backpack, let it go.

And Now for Something Completely Different...

We can all learn something from how Chris Downey – a blind architect – sees the world.