Title image for article entitled the importance of knowing when to cut your losses

The Importance of Knowing When to Cut Your Losses

It is an inherently human trait that if we want to believe something we will do everything we can to believe that something, we will seek out evidence which affirms our view and ignore all evidence which tells us we are wrong. This is one of the reasons why the Internet is helping to create such a divided world, because all the algorithms are based around affirmation bias, that is to say people are shown only what they want to see and thus only see things which backup what they already believe.

But the question is why do so many of us only want to see things which affirm our views even if deep down perhaps we may know or at least suspect that we are wrong in our belief.

The answer to this lies in another inherently human trait, the fear of being wrong. For example, imagine believing that your actions do not lead to unfair persecution of others, only for somebody to try to argue to you that they do. For a person to accept that they are wrong, they also have to accept that they have been unfairly persecuting others. This is not an easy thing for any person to do and many people will just point blank refuse to ever accept that their actions have led to unfair persecution of others.

But it is not just with our beliefs that we have this problem, we do this in all quarters of our lives, from relationships where everything tells us that this person is wrong for us yet we will overlook all of that evidence and instead do everything we can to prove to ourselves that they are right for us, to investments, where even though we have already lost a ton of money we manage to persuade ourselves that if we invest more money then in the future we will make back our money.

The fear of being wrong and the consequences of being wrong is the main reason why so many people very much struggle to cope with the notion that we could be wrong. Think of it like this imagine that you are absolutely certain that you are on to a dead cert winner. And you invest everything into this dead cert, do you really want somebody to prove to you that you are actually wrong and that this dead cert is actually a dead loss?

Logic says that a person would say yes because the sooner you realise the sooner you can cut your losses, but the reality is people want to hold on to the hope that they could be right for as long as possible out of fear of the consequences or rather out of fear of how much they will lose if they are wrong. That is to say people struggle to cope with the consequences of their mistakes especially if those consequences would unleash a devastating blow upon them.

For example imagine you invest all your time and effort into a person, invest years of your life into believing you will spend your life with this person, imagine believing that they are perfect for you, only to realise that they are not, everybody knows just how much of a devastating blow that would be which is why the vast majority in this situation will do everything they can to try to avoid the reality of that truth, and the longer and more a person has invested in a belief, the harder it will be for that person to accept that they have made a bad bet.

However, it doesn’t have to be this way, despite it being an inherently human trait it is also an indisputable fact that the sooner a person realises that they are wrong the sooner they are able to get out and thus limit the consequences of their being wrong. This is why no matter how certain you are that you are right, you must always be open to the idea that you could be wrong because if you are wrong the sooner you identify as such the less you lose.

Which means the greatest trait a person can have in regards to living a happy and successful life is learning when and how to cut their losses, because by default any person that learns how to do this will cease putting all their time and efforts into bad investments and will instead learn to invest only in winners. And in that is the key to success and happiness.

That’s all from me for today, stay safe!

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