This story has a simple , yet important message. Sometimes its the simplist stories that make us ponder the most…
One day a professor entered his classroom,and asked his students to prepare for a surprise test. They all waited anxiously at their desk for the exam to begin.
The professor handed out the exams with the text facing down, as usual. Once he had handed them all out, he asked the class to turn over the papers
To everyones surprise, there were no questions- just a black dot in the center of the sheet of paper.
The professor seeing the expression on everyones faces, told them the following: “I want you to write about what you see there” the students, confussed, got started on the inexplicable task.
At the end of the class, the professor took all the papers, and started reading each one of them out loud, infront of all the students. All of them with no exception,defined the black dot, trying to explain its position in the center of the sheet.
After all had been read, the classroom silent, the professor started to explain:
“Im not going to grade you onthis, i just wanted to give you something to think about. no one wrote about the whitepart of the paper. everyonefocused on the black dot – and the same happens in our lives.
We have a white piece of paper to observe and enjoy,but we always focus on the dark spots.
In personal finance, we experience the ‘dark spot phenomenon’ all the time. We love statistics and look at periods (let’s say a specific 5 years period) when SIP in a fund or the index had produced a negative or zero returns. We use such specific data to bolster a general argument against investing in equity markets.
This to me is a dark spot phenomena. Instead of looking at every other period where the investor had made good returns; much like the large expanse of white paper, we look at that one period when returns failed to show up; the lone dark spot. One episode catches our attention but the majority occurrences continue to elude us.
So in future while arguing on personal finance please ensure that you’re not looking at the dark spot.