Friends,

Two weeks ago, a tiny miracle occurred in college football. Ohio State (ranked #2 in the nation) and Michigan (barely over .500) squared off what's become an annual tradition called "The Game".

The narrative: it would be the most lop-sided in history. Ohio State was favored by 20 points.

The reality: Michigan won, 13-10.

In July 2015, Democratic Minnesota congressman Keith Ellison was interviewed by ABC's George Stephanopolous. He said: "This man [Donald Trump] has some momentum. We better be ready for the fact that he may be leading the Republican ticket."

The reaction from the other guests captured the media narrative of the time: belly laughs with Stephanopolous saying, "I know you don't believe that."

The reality: next month, Trump will begin his second term as president.

And in October 2022, the narrative was crystal clear. Bloomberg Economics predicted -- putting the odds at 100% -- that there would be an economic recession within the next twelve months.

The reality: in the 26 months since that prediction, not only has there not been a recession, but GDP has grown by over 5% while the S&P 500 has returned 71% for investors who weren't scared off by such "100% certain" predictions.

Reality will always trump the narrative.

That's why we play the game, hold the election, and measure our economy with hard numbers.

None of this is to say that narratives are evil. In fact, creating narratives is the most human thing we do. If we stop, we'd lose part of our humanity.

The goal isn't to eliminate narratives. It's to change our relationship with them.

We have a choice in what narratives we choose to entertain. The best investors have mastered the ability to hold multiple opposing narratives in their heads at the same time -- and endure this discomfort that doing so creates.

As a side benefit, doing so will make the shock of the upset win -- whether from sports, politics, or the economy -- much more palatable. It will also make the world appear far more understandable.

If you can have a clearer view of the world and better returns over the long run to boot from this practice -- that alone makes it worth it.

Wishing you investing success,

P.S. Feroldi recently published a masterclass on the stock market. Check it out (it's free).