The Stockdale Paradox

What does a marathon runner have in common with a Vietnam prisoner of war? And how can we apply their lessons to situations like the COVID 19 quarantine? The answer lies in the Stockdale Paradox.

The Stockdale Paradox Explained

Who is Stockdale, what’s his paradox? During the Vietnam War, James Stockdale spent seven  years as a prisoner of war in the infamous “Hanoi Hilton” prison camp. The Stockdale Paradox suggests that when facing a problem, you must both face the brutal facts of current reality and also never lose faith that you’ll prevail in the end.

I won’t go into gritty details of Stockdale’s imprisonment, but I think you’ll find it quite eye-opening.

Some of the older readers of the Best Interest might remember Stockdale as a United States Vice Presidential candidate on Ross Perot’s ticket in 1992. Stockdale was the guy who didn’t have his hearing aid turned on at the debate, and needed to ask to have a question repeated.

While that moment of deafness became good fodder for night-time TV comedians, Stockdale had a pretty good excuse. The Viet Cong prison guards ruptured his ear drums when he wouldn’t divulge any secrets. Pretty tough guy.

Despite repeated torture over those seven years, Admiral Stockdale survived an unbroken man. He remained a leader to his fellow prisoners. He didn’t give up any vital intelligence information.

How did he do it? Stockdale constantly reminded himself of two vital philosophies. But because these two ideas are somewhat at odds with each other, they’re now known as the Stockdale Paradox:

1. Never lose faith that you will prevail in the end.
2. Maintain the discipline to confront the most brutal facts of current reality.

That’s it. Holding both those thoughts simultaneously is the Stockdale Paradox.

One Tough Dude

Stockdale felt that if he ever lost the belief that he would eventually be free, then he would lose his purpose and quickly wither.

In other words: Part 1 of the Stockdale Paradox is hope. But hope is different than blind optimism. If Stockdale failed to confront his current situation, then he wouldn’t be able to steel himself against the harsh daily conditions.

Part 2 of the Stockdale Paradox is realism. For seven years, Stockdale woke up knowing that he might get tortured that day. There’s no sugar-coating that reality. But, in the back of his mind, he maintained faith that he would eventually be free.

It’s brass tacks vs. boundless optimism. It’s one-day-at-a-time vs. 20 years from now. To consider both circumstances simultaneously is paradoxical. That’s the Stockdale Paradox.

For all of Stockdale’s time in Vietnam, this mental paradox allowed him to survive intact. In the business world, author Jim Collins suggests that the companies using the Stockdale paradox can simultaneously fight their most urgent fires while maintaining their true mission.

What About for Me and You?

The Stockdale paradox is easy to talk about, but hard to implement.

It’s easy to say, “I have faith that I will one day be 25 pounds lighter. But today, I gotta do my 1-hour workout.”

We all have that internal communications system, where we convince ourselves that there’s an optimal version of ourselves that achieves every goal and does the tough work.

But that workout will make you uncomfortable. You’re already drained from the work day. You’ll be out of breath. You’ll be sore tomorrow. And then you have to do it again, and again, and again. The optimal version of our person takes hard work.

That’s why the Stockdale paradox encourages us to be strict with ourselves. It’s not easy to lace up your sneakers day after day, or to keep up on optimism when you’re in pain. I certainly struggle with that. It’s vital to never confuse long term optimism with the current situation.

But Stockdale did it, and so can you.

In your personal finances, the Stockdale Paradox can help you achieve your goals. What are some examples?

The Stockdale Paradox: Long-Term Financial Outlooks

When do you want to retire? What do you want out of life? What actions are required for you to get there, and how long will it take?

These questions have answers that could take you 30 years into your future. They involve journeys that won’t end soon. While that makes them almost intangible on one hand, it also means that they’ll be defining moments when you do achieve your goals.

For example, it helps to understand your net worth targets by age. And if your financial plan doesn’t work out as planned, you’ve got to understand how you’ll survive in a bear market.

Things might be hard right now, but you’ve gotten this far. Believe in yourself that you’ll get where you want to go. Giving up simply isn’t a choice.

You can apply the Stockdale Paradox to your long-term financial goals. But the Stockdale Paradox works for day-to-day goals as well.

The Stockdale Paradox in Day-to-Day Finances

But where are you right now in your personal finance journey?

Do you have student loan debt? Are you living paycheck to paycheck? Perhaps you’re just starting a family?

These are the types of present-day facts that should be dictating your financial life. You can’t neglect your debt. You can’t spend like a fool when you have a mortgage. Dreaming about your future lake house won’t put food on the table or presents under the Christmas tree. What can you do today to chip away at the problems you’re facing?

If you’re looking for other examples, I’d refer you back to my thoughts on debt and on the impulse to buy. If you’re in debt, I think you should confront that gorilla. Face the facts. Take action. Don’t ignore it! If you regret things you’ve spent money on, you’ve got to get to know your “buy that!” impulse.

It’s uncomfortable, I know! But you cannot be successful while living in fantasy land with the Easter Bunny. Facing reality is good for you, just like that hard workout. That’s the “day-to-day” aspect of the Stockdale Paradox.

Our Life is Not a Prison Camp

I’m reminded too of the story of Victor Frankl. The Austrian psychologist’s experience in a Nazi concentration camp—while horrific—helped him solidify some incredible ideas about the human psyche.

Namely, that you can never afford to relinquish your own ability to react to a situation. Even when faced with the ultimate human horrors, you can choose how you react. And that, in short, is the same as the Stockdale Paradox.

The stories of Stockdale and Frankl could leave you with a broken heart, but I think we should also view them as heroes.

By combining the two beliefs of the Stockdale paradox, you provide yourself with a day-to-day gameplan and a long-term roadmap. You’re prepared for the present, planning for the future, and (hopefully) learning from the past as you go along.

I sincerely hope you never have to face as brutal of a reality as Jim Stockdale or Victor Frankl did. But by understanding the Stockdale Paradox, you can find wisdom in their words. You will prevail in the end.

Thanks for reading the Best Interest.