Why we cling to a past that lies to us

There are truths we know perfectly well and ignore magnificently. Not out of ignorance, but by nature. We all know, somewhere, that the ex who hurt us three times won’t hurt us any less the fourth. We know that the stock that doubled last year won’t necessarily double this year. We know that the brilliant position someone held in the past guarantees nothing about their future behavior. We know. And yet, we start over. We go back. We overweight.

This post isn’t a finance post, nor really a psychology one. It’s a confession: that of a man who struggles, with mixed results, against one of the most stubborn biases of the human species; that visceral, almost amorous faith in the repetition of the past.

There’s something dizzying in this observation: the human being is perhaps the only creature capable of formulating a rule it knows to be true, of repeating it aloud, of measuring its significance; and of breaking it methodically, almost ritually, the moment its own interests are at stake.

Past performance is no guarantee of future results. The sentence is carved into the regulatory marble of every financial prospectus, repeated like a mantra by fund managers, economists, journalists. It has become so omnipresent that we no longer hear it. And that’s precisely where the trap lies: by dint of being a universal warning, it has become background noise: a legal courtesy, not a cognitive injunction.

Because our brain hasn’t read the prospectuses. It was trained, over millions of years of evolution, in a radically opposite logic: what worked yesterday deserves trust. The bush that hid a predator last week deserves the same wariness this week. The heuristic is robust, it has saved lives, it has structured civilizations. The problem is that it applies indiscriminately to the Pleistocene savanna and to the 21st-century stock market: two environments whose logics have absolutely nothing in common.

Nassim Taleb called this the narrative fallacy: our irrepressible need to weave meaning onto the past in order to extract from it a projectable causality. We watch a curve rise for fifteen years and we no longer see a curve: we see an intention, a direction, almost a promise. The S&P 500 doesn’t rise because the American economy is healthy; but after fifteen years of gains, it seems to us that it rises because it’s meant to rise. Past performance has become an argument. And we hold on to that argument, not because it’s solid, but because it’s ours. We built it with our own hands, fed it with our own experiences, sewed it into the fabric of our own history.

And that’s where the bias stops being an error and becomes something murkier: loyalty. Loyalty to a lived experience, to an embodied reality. Cold analysis whispers to me to turn toward other horizons: those neglected, almost thankless markets that don’t yet have beautiful stories to tell us, no glorious curves to show off, no golden decades to invoke. Lands with no flattering memory, and therefore no hold on our emotions. But something in us resists, something that looks like caution but is in reality cognitive nostalgia: an irrational loyalty toward what has, so far, spared us.

The real battle, then, isn’t intellectual. It’s almost moral. It’s about accepting that knowing isn’t enough, that understanding a bias doesn’t dissolve it, that you can hold the correct theory in one hand and the opposite behavior in the other, without either ever correcting the other on its own. It’s a form of humility that few systems of thought truly know how to integrate: I am clear-eyed about my own blindness, and that blindness persists. And it persists all the better because willpower, for its part, runs out. Every conscious trade-off, every resistance to the reflex, draws on a reserve that isn’t inexhaustible. You can hold the course one morning, two weeks, a quarter. Then the fatigue sets in, not the fatigue of the body, but the duller fatigue of permanent vigilance exercised against oneself.

That’s why wisdom, in this case, is perhaps not to defeat the bias (an often illusory undertaking) but to do what Ulysses did before the Sirens: to bind himself to the mast before their song begins. Not because we’re weak, but because we know we will be. To bind yourself to the mast is to accept that the morning’s clarity won’t withstand the evening’s intoxication, and to make your arrangements accordingly, in cold blood, before the music of the past plays again. What the Greeks understood, and what we relearn with every relapse, is that the highest freedom isn’t the absence of constraints: it’s the deliberate, clear-eyed choice of the ones we impose on ourselves.

At bottom, our relationship to past performance resembles, feature for feature, what we experience in love. We fall in love with a story as much as with a person. We project onto the future what the past made luminous. We forgive the weak signals because the strong signals, after all, were magnificent. And when everything collapses, we wonder, sincerely, how we failed to see coming what everything had nonetheless foretold.

The stock market, for its part, isn’t cruel. It’s simply indifferent to our memory. The S&P 500 doesn’t know it treated us well for fifteen years. It owes us nothing, doesn’t know us, doesn’t love us back. But we do. We love it with a biased, backward-looking love, fed on past returns like old letters reread too often.

To turn further away from this index in favor of those markets* with no recent glory, no reassuring curve, no flattering narrative to tell myself in the evening: this is therefore far more than a rational financial decision. It’s an almost sentimental act: that of choosing the future over nostalgia, analysis over blind loyalty. Of falling in love, in short, not with what was, but with what could be.

And that is perhaps the hardest thing there is.

* In this case: the PAEJ and the PAEEM, for those who’d like to put names to these lands with no flattering memory.