Many people have heard of the “Marshmallow Test,” Walter Mischel’s famous experiment testing the patience and self-control of preschoolers in the early 1960s. The children were seated next to a table with a marshmallow on a plate, and told if they could wait 15 minutes without eating it they would be able to get another marshmallow. The videos of these cute kids trying to resist the lure of a single marshmallow are as wonderful to watch as they are instructive in how difficult it is to defer gratification; only a third of the children were able to wait long enough to get the second marshmallow.
Interesting for sure but hardly Earth-shaking information. The study would gradually fade into scholarly oblivion and that might have been the end of it for the Marshmallow Test. Then in 2006 Mischel published a follow-up study that tracked the original subjects 40 years later—and those results blew the cover off the ball.
The follow-up study revealed that the children who were able to wait for a second marshmallow ended up with dramatically higher SAT scores, higher GPAs in college, greater earnings during their working life—even lower body-mass indexes—than those children who could not wait. The attributes of patience and self-control were not merely useful in gaining an additional marshmallow, but rather harbingers of a better, richer and more fulfilling life. The Marshmallow Test became a common metaphor for that insight.
In retrospect the lessons seem obvious and self-evident. Given the fact they are ignored regularly by so many people, one would wonder which is more notable—the lessons or the irrational behavior? Of course I am not talking about 5-year-olds. I am talking about full grown adult investors who understand the value of patience and deferred gratification, but are simply incapable of putting into action what they know in their heads.
Being a patient investor does not mean you are absolutely certain about the future or that you have to ignore current events. Being a patient investor means that you are discerning enough and willing enough to accept the kinds of risks whose actualization and ultimate repair exist over time periods that exceed the patience of most other investors, and therefore can be exploited for substantial and recurring profit. Experienced investors commonly refer to this as “time arbitrage.”
Because of the growing popularity of behavioral economics, we now understand that we stand in the way of our own success far more often than we realize. Less well-known, but an equally persistent and powerful enemy to our patience, is a side effect of some of the impressive and useful technology most of us rely upon daily to connect to each other and the world; the same technology that has greatly improved our productivity and our lives.
I was an early adopter of technology. I bought my first PC in 1983, quickly saw the benefits of email, wireless and the Internet, was the first on my block to get a broadband connection, and became completely paperless before the end of the 20th century. I can say with total confidence that I could not run my business with anywhere close to the flexibility, efficiency or effectiveness that these incredible tools have afforded me—and without question my personal life is better as a result of advances that even to this day amaze me.
Yet with every benefit there’s always a cost—and this particular cost was one I could never have imagined.
I’ve always been an avid reader. About four years ago I noticed that my normal capacity to spend long hours of uninterrupted reading was just not there anymore. I assumed it was because I was getting older. About the same time I read Nicholas Carr’s book “The Shallows.” Carr related that his ability to concentrate wasn’t what it used to be and his long reading spells were becoming non-existent.
He wrote: “The very way my brain worked seemed to be changing…. I began worrying about my inability to pay attention to one thing for more than a couple of minutes…. [M]y brain, I realized, wasn’t just drifting. It was hungry. It was demanding to be fed the way the Net fed it—and the more it was fed, the hungrier it became.”
What Carr was discovering was something that neuroscientists had been observing for years. The brain has plasticity: It can be trained to change—and not necessarily in positive ways. Carr noted that “the more we use the Web, the more that we train our brain to be distracted—to process information very quickly and very efficiently but without sustained attention.”
A 2009 study by Ball State University revealed that Americans spent over eight hours of their day looking at television, a computer monitor, tablet or smart phone—often a few of them at the same time. Carr wrote: “The shift from paper to screen doesn’t just change the way we navigate a piece of writing. It also influences the degree of attention we devote to it and the depth of our immersion in it.” Blogger Cory Doctorow labeled it an “ecosystem of interruption technologies.” The natural result of our spending so much of our waking hours in “screen time” is that our brains are creating new pathways, ones that allow us to feel comfortable and competent in an environment that provides us with quick answers, endless variety and limitless distraction.
Is there benefit to this? Without a doubt. I did my research for this column with incredible efficiency—accessing research, news articles, opinion pieces and data in a few hours; something that previously would have taken days, even weeks. But if I hadn’t taken the time to read Carr’s book—putting it down, letting the ideas settle and then coming back to them—my understanding of the nuances of his arguments, or how they connect to other ideas, could never happen.
Unless we retrain our brains to become accustomed to deeper kinds of thinking, today’s online, on-screen, always connected world will continue to reinforce our brains’ very happy existence in the shallow end of the intellectual pool.
An implication of Carr’s argument for us is clear: It will be increasingly difficult for investors to build the kind of foundation robust enough to withstand the powerful challenges markets inevitably pose to our deepest held convictions. And with our attention spans cut so short, the odds of time arbitrage or any long-term strategy hitting our radar screen seem increasingly remote.
Even if Carr’s argument turns out to be completely baseless, we’re not off the hook. The media regularly bombard us with this recurring and repetitive message: “What is happening right now is really important—and you need to do something about it!” The world we live in incents us to keep our attention squarely on the issue du jour.
Anyone who has been physically active knows that you can’t run a marathon unless you seriously train for it—the strength, the endurance and the aerobic capacity require time and effort to build. And while I can attest to the fact that at some point in the race, it becomes mind over matter, you can’t run a marathon without the physical preparation.
Similarly, the intellectual preparation needed to have the kind of robust patience necessary to execute and sustain a “buy and hold” strategy involves much time and effort—but as we know instinctively and empirically, the effort is worth it. Especially when the all-too-common alternative is the “buy and hope” gambit—and we know how that turns out.