In Being Mortal, an immensely compassionate book about the final phase of life, Atul Gawande writes about his father. A vibrant and healthy man his whole adult life, Gawande’s father starts to feel a persistent pain in the back of his neck and the loss of sensation in his fingers. An MRI reveals an incurable spinal cord tumor close to the base of his skull. Spinal cord tumors are rare, so there aren’t many neurosurgeons who specialize in them. In the U.S., according to Gawande, there are just two – so they made appointments with both.
Both neurosurgeons were incredibly experienced and well qualified, and they both recommended the same surgery. But they went about their recommendations in notably different ways. The neurosurgeon in Boston made the recommendation with an air of certainty. To him, surgery was the only option, and it had to be done as soon as possible. There were risks, but he wasn’t very concerned about them. The neurosurgeon in Cleveland painted a more ambiguous picture. Surgery came with the risk of quadriplegia (full-body paralysis) so he took the time to ask Gawande’s father about his goals and about what was important to him. For Gawande’s father, being paralyzed would take away many of the things that brought his life meaning. A doctor himself, he wanted to continue to see his patients.
Gawande’s father chose to work with the neurosurgeon in Cleveland, and he decided to hold off on surgery until the symptoms interfered with the things in his life that sustained him. The neck pain and loss of sensation were major nuisances, but he could deal with them, still perform his duties as a doctor and play tennis with friends. By being open about the uncertainty of surgery and by asking about his patient’s personal goals, the Cleveland neurosurgeon helped Gawande’s father choose a plan that supported the things that were most important to him.
Financial pundits could learn a lot from this story. Take the recent coverage on the prospects of a recession. To be sure, recessions are scary things. The last one we had – which lasted from December 2007 to June 2009 – is referred to as the Great -Recession for good reason: it was historically extreme. Economic expansion stopped dead in its tracks. A lot of people lost their jobs. There was a national housing crash that nearly toppled a dozen of our largest financial institutions. We have apt cause to fear recessions, which makes them a topic of interest for television shows. On TV, talking about recessions with an air of certainty is compelling and probably helps with ratings. But too much certainty can lead to false confidence and bad decision-making.
In February of 2019, private-sector economist Andrew Brigden determined that there have been 469 economic downturns since 1988. Of those 469 downturns, the International Monetary Fund (IMF) had predicted only four by the preceding spring. Reading that, one might assume that the IMF simply doesn’t make predictions calling for economic slumps very often – but it does. It’s just that the predictions are not usually correct. By the time a downturn occurred, the IMF had projected 111 slumps – but not even a quarter of them had actually come to pass.
The private sector also struggles at predicting recessions. A recent working paper by Zidong An, Joao Tovar Jalles, and Prakash Loungani discovered that of 153 recessions in 63 countries from 1992 to 2014, only five were predicted by a consensus of private sector economists in April of the preceding year. Predicting recessions is difficult.
But even if a financial pundit knew for certain when the next recession forms, that knowledge would probably make it harder for that person to invest well, not easier. During the recessions of 1945, 1953, and 1990, for example, the U.S. economy contracted for between 8 to 10 consecutive months. Those contractions came and went, however, without the emergence of a major market decline. Recessions don’t always bring about bear markets.
Tracking recessions also doesn’t insulate investors from experiencing periods of investment loss. The stock market can suffer a bear market during economic growth. The bear markets of 1966 and 1987 illustrate this well. Both occurred during times of economic expansion. In 1966, the unemployment rate was under 4% and real GDP growth was a robust 4.5%, yet that year posted a market decline of 22%. In 1987, the unemployment rate was about 6%. (While not exceptionally low, this was a marked improvement over prior years). That year, real GDP growth measured 4.5%, much higher than the real GDP growth we experience today. And yet, 1987 posted a market decline of 37%. The economic health of those years did not prevent sharp market declines.
Different Patients, Different Priorities
Near the end of Being Mortal, Gawande recounts the story of a woman named Susan Block and her father, who was also diagnosed with a spinal cord tumor. The news was devastating, but somehow before surgery, Block found the courage to discuss some important questions with her dad, questions like the ones Gawande comes back to again and again in his book.
What were her father’s biggest fears and concerns?
What goals were most important to him?
Which trade-offs was he willing to make, and which ones was he not?
Block’s father answered these questions differently than Gawande’s father. While being paralyzed would be very hard for Mr. Block, he could accept it in exchange for a longer life. He said if he could “watch football and eat chocolate ice cream” that it would be enough, which amazed his daughter, in part because she hadn’t even known that her father watched football. As it turns out, there were complications during Mr. Block’s surgery. When the surgeons came out to speak with Susan to ask if they should stop the surgery, she knew what to ask them. “Will he be able to watch football and eat chocolate ice cream?” “Yes,” came the reply. So she told them to proceed.
The questions Gawande suggests asking in the final phase of life are similar to some of the questions we ask at the start of our financial planning work. As financial planners, it would be comforting to believe that our education, our training, and all the reams of data at our disposal make it possible to accurately predict all that the future holds, but we can’t. That’s why talking about concerns, goals, and trade-offs is never an old topic. It’s empowering to answer questions about what is most important to you at each phase of your financial life. Even when you’re faced with difficult circumstances, such as a surgery that could have severe complications, taking the time to answer those questions can provide a light to guide you through.