The Framing Effect and XEQT: How the Way You Think About Returns Is Costing You Money

Last October, I was standing in the checkout line at a Loblaws in Toronto when I made the mistake of opening my Wealthsimple app. My XEQT position was down $1,847 on the day. That thick red bar filled my screen, and I felt my chest tighten like someone had cinched a belt around my ribs. Almost two grand, gone, between breakfast and lunch.

I closed the app. I put my phone back in my pocket. I paid for my groceries. And then, sitting in the parking lot, I opened it again – because apparently I enjoy suffering.

But this time, I did something different. I tapped the little dropdown that lets you change the time horizon from “1D” to “1Y.” And there it was: +$14,230 on the year. Same portfolio. Same moment in time. Same number of XEQT shares sitting in my account. The only thing that changed was the window I was looking through.

Down $1,847 and up $14,230 were both true. Simultaneously. About the same pile of money. And yet one frame made me want to sell everything, and the other made me want to call my parents and tell them their son had figured out this whole money thing.

That, right there, is the framing effect in action. It is one of the most dangerous cognitive biases in investing, and if you hold XEQT – or any broad market ETF – it is almost certainly costing you money in ways you have never thought about.

Let me show you how.

1. What Is the Framing Effect?

The framing effect is a cognitive bias discovered by psychologists Daniel Kahneman and Amos Tversky in the early 1980s. The core idea is deceptively simple: people react differently to the same information depending on how it is presented.

Not different information. The same information, wearing different clothes.

The most famous example comes from medicine. Researchers asked people to choose between two treatments for a disease expected to kill 600 people:

• Frame A: “This treatment saves 200 lives.” (72% of people chose it.)
• Frame B: “This treatment has a 400-person death rate.” (Only 22% chose it.)

Same treatment. Same outcome. Same 200 survivors and 400 deaths. But the word “saves” versus the word “death” completely flipped people’s preferences.

You see this everywhere in daily life. A yogurt labeled “95% fat-free” flies off the shelf. The same yogurt labeled “contains 5% fat” sits there. A surgeon who tells you “90% of patients survive this procedure” gets your signature on the consent form. The one who says “10% of patients die” makes you want a second opinion.

Key insight: The framing effect is not about being tricked by lies or misleading data. It is about your brain reacting to how truth is packaged – and in investing, the packaging changes every time you open your brokerage app.

Here is where it gets expensive: your investment portfolio is one of the most aggressively reframed pieces of information in your entire life. Your brokerage app can show you the same XEQT position as a daily gain, a daily loss, a percentage, a dollar amount, an unrealized figure, a total return, or a since-inception number. Each frame tells a completely different emotional story – and your brain treats each story as if it were a different reality.

2. The Five Ways Framing Tricks XEQT Investors

Let me walk you through the five frames that do the most damage to long-term investors. If you have ever felt an urge to sell during a dip, I can almost guarantee one of these frames was pulling the strings.

a) Daily Returns vs. Annual Returns vs. Decade Returns

This is the big one, and it is the trap I fell into in that Loblaws parking lot.

The stock market is positive on roughly 53% of trading days. That means on any given day, it is nearly a coin flip whether your portfolio shows green or red. If you check daily, you are going to see red almost half the time. Your brain will process each red day as a loss event, triggering the same stress response you would feel if someone took money out of your wallet.

But zoom out to calendar years, and the market has been positive roughly 73% of the time. Zoom out to any rolling 10-year period, and XEQT’s underlying indices have been positive virtually 100% of the time.

Same investment. Same returns. But the daily frame makes it feel like a gamble, the yearly frame makes it feel like a solid bet, and the decade frame makes it feel like a certainty.

This connects directly to what I wrote about in how to stop checking your portfolio. Every time you check, you are choosing a frame – and the more frequently you check, the more likely that frame is to be negative.

b) Dollar Amounts vs. Percentages

Here is a fun exercise. Which of these feels worse?

1. “Your portfolio lost $2,500 today.”
2. “Your portfolio is down 1.2% today.”

If you are like most people, the dollar amount hit harder. $2,500 is a vacation. It is two months of car payments. It is real, tangible, spendable money. Your brain immediately translates it into things you could have bought.

But 1.2%? That is a rounding error. That is noise. You would not panic if someone told you your house was worth 1.2% less today than yesterday – you would shrug and go make dinner.

And yet they describe the exact same event.

This is especially vicious as your portfolio grows. A 1% dip on a $25,000 portfolio is $250 – annoying but manageable. A 1% dip on a $500,000 portfolio is $5,000 – and suddenly you are thinking about whether you should “lock in gains” or “move to something safer.” The percentage has not changed. Your risk has not changed. But the dollar frame has triggered a completely different emotional response.

c) Unrealized Loss vs. “Money I Haven’t Spent”

When your XEQT position drops, your brokerage app shows an “unrealized loss.” Let that term sink in. Unrealized. As in: not real. As in: it has not happened yet. As in: it only becomes a loss if you sell.

But the app does not frame it that way, does it? It shows a red number. It might even send you a notification. “Your portfolio is down $3,200.” Not “your portfolio’s current market quote is temporarily lower than what you paid, but since you are not selling for 20 years, this number is about as relevant as today’s weather in a city you will never visit.”

Here is a reframe that changed my entire relationship with dips: an unrealized loss is just money you have not spent yet sitting in shares you still own. You bought 500 shares of XEQT. After a dip, you still own 500 shares of XEQT. Nothing was taken from you. The market just temporarily changed its opinion about what those shares are worth today – an opinion that shifts roughly 252 times per year.

If you have ever felt the sting of loss aversion while staring at a red portfolio screen, the framing effect is the amplifier. Loss aversion provides the pain; framing determines how loud the volume is turned up.

d) “Lost $3,000” vs. “Grew $12,000 Less Than I Hoped”

This one is subtle but powerful. Imagine two scenarios:

• Scenario A: You invested $50,000 in XEQT, and it grew to $47,000. You “lost” $3,000.
• Scenario B: You invested $50,000 in XEQT expecting 10% returns, and it grew to $53,000 instead of $55,000. You “missed out on” $2,000.

In Scenario A, you frame the outcome as a loss, even though it might be a temporary dip in year one of a 30-year investment. In Scenario B, you actually made $3,000 but frame it as a shortfall because reality did not match your mental target.

Both frames can make you do something destructive. Frame A might make you sell to “stop the bleeding.” Frame B might make you chase performance and switch to a different, riskier investment – which is exactly the recency bias trap I have written about before.

The antidote is asking one question: “Did I lose money, or did my expectations lose a fight with reality?” Most of the time, it is the second one.

e) Financial Media Framing

Open any financial news site after a 2% market decline and count the number of times you see the words “plunge,” “crash,” “tumble,” “rout,” or “bloodbath.”

Now open the same site after a 2% gain and count the uses of “soar,” “surge,” “rally,” or “skyrocket.”

A 2% move in either direction is normal. It is what markets do. But “Markets Dip 2%” does not get clicks. “MARKETS PLUNGE AS INVESTORS FLEE” gets clicks. And every click teaches your brain that a routine fluctuation is actually a five-alarm emergency.

I covered this in depth in my financial news survival guide for XEQT investors, but it bears repeating here because financial media is essentially a professional framing machine. Their business model depends on framing neutral information in the most emotionally extreme way possible, because attention equals advertising revenue.

They are not lying to you. A 2% decline is real. But the frame they wrap around it – the scary headline, the red graphics, the “experts warn” language – is designed to make you feel something. And what you feel determines what you do with your portfolio.

3. The Same Returns, Five Different Frames

To make this concrete, let me show you how the exact same XEQT portfolio can look completely different depending on which frame you choose. Imagine you invested $50,000 in XEQT and held it for five years through a typical market cycle.

Read that table again. Every single row describes the same portfolio over the same five years. The person who checks daily experienced the first row hundreds of times. The person who checks annually mostly experienced the fourth row. And the person who checks once after five years only ever sees the fifth row.

Same investment. Same returns. Completely different emotional experiences. And emotional experience drives behavior – which drives actual returns.

Key insight: You cannot control the market’s returns, but you can control which frame you look through. Choosing the right frame is not about ignoring reality – it is about seeing all of reality instead of one misleading slice.

4. The “Zoom Out” Exercise

Here is something I do now whenever I feel that familiar tightness in my chest after seeing a red number. I call it the Zoom Out Exercise, and it takes about 30 seconds.

Step 1: Look at the daily return. Feel whatever you feel. Do not fight it.

Step 2: Switch to the one-year view. Notice how the day’s dip is barely a blip on the line.

Step 3: Switch to the all-time or five-year view. Notice how even the bad months are just small wiggles in an upward-sloping line.

Step 4: Ask yourself: “Am I retiring today?” If the answer is no, close the app.

That is it. The whole exercise is about deliberately choosing a wider frame. You are not lying to yourself – you are not pretending the dip did not happen. You are simply refusing to let the narrowest possible frame dictate your financial decisions.

This is the same principle behind the advice to survive your first market crash without panic-selling. The crash is real. The frame you view it through determines whether you see a disaster or a buying opportunity.

When I did this in that Loblaws parking lot, the shift was immediate. The $1,847 daily loss was still there. But it existed within the context of $14,230 in annual gains, which existed within the context of a portfolio that had roughly doubled since I started investing in XEQT. The daily number stopped feeling like the truth and started feeling like what it actually was: one data point out of thousands.

5. How Financial Media Exploits the Framing Effect

I want to spend a moment on this because I think most investors underestimate how deliberately financial media uses framing to manipulate their emotions.

Consider a day when the S&P 500 drops 2.4%. Here is how different outlets might frame the exact same event:

• Headline A: “S&P 500 Falls 2.4% on Tuesday”
• Headline B: “Markets Plunge as Investors Dump Stocks”
• Headline C: “Worst Day in Three Months as Sell-Off Accelerates”
• Headline D: “Billions Wiped Off Market Value in Brutal Session”

Headline A is neutral and factual. Headlines B through D are framed to trigger fear, urgency, and a sense that everyone else is already running for the exits and you are the last one standing there like a fool.

And here is the mechanism that makes this so dangerous: when you read a fear-framed headline, your brain does not process it as “a journalist chose dramatic words.” Your brain processes it as “the situation is dramatic.” The frame becomes invisible. You think you are reacting to the market. You are actually reacting to an editorial decision made by someone whose salary depends on your click.

This is why I recommend treating financial news the way you would treat a horror movie – entertaining, perhaps, but not a basis for life decisions. If you want the full playbook, I wrote an entire survival guide for XEQT investors navigating financial news.

The Anchoring Trick

Media outlets also exploit framing by choosing their comparison point. Watch for this:

• “Markets down 15% from January highs” (anchored to the peak – maximum pain)
• “Markets up 22% from October lows” (anchored to the trough – maximum optimism)
• “Markets roughly flat over the past 18 months” (anchored to an arbitrary past date – maximum boredom)

All three could be true on the same day. The outlet chooses whichever anchor produces the emotional reaction that matches the story they want to tell.

6. Seven Practical Reframing Strategies

Knowing about the framing effect is not enough. You need systems that default you into better frames. Here are seven strategies I use, and I recommend all of them for XEQT investors at any stage.

1. Check Your Portfolio Monthly, Not Daily

This is the single highest-impact change you can make. Checking daily means you see red roughly 47% of the time. Checking monthly drops that to about 38%. Checking annually drops it further to about 27%. You are not changing your returns. You are changing your frame – and your frame changes your behavior.

If you struggle with this, read my full post on how to stop checking your XEQT portfolio. It has specific tactics including app timers and notification settings.

2. Look at Returns in Years, Not Days

When you do check, immediately switch to the one-year or all-time view before you let the daily number register. Make the wide frame your default. The daily number will still be there if you want it, but it should never be the first thing you see.

3. Think in Shares Owned, Not Dollar Value

This is my favourite reframe, and it sounds almost too simple to work. Instead of thinking “my portfolio is worth $47,000,” think “I own 1,850 shares of XEQT.”

On a bad day, your dollar value drops. But your share count? Identical. Nobody took any shares from you. You still own the same slice of over 9,000 companies across 49 countries. The market just temporarily repriced what it would pay for those shares today – and since you are not selling today, that temporary price is irrelevant.

On a really bad day, this reframe goes even further: if you are still buying, a dip means your next contribution buys more shares. Your ownership of the global economy just went on sale.

4. Set Up Automatic Contributions

When you automate your XEQT purchases through Wealthsimple, you eliminate one of the most powerful framing triggers: the moment of deciding whether to buy. Every time you manually buy, you see the current price and mentally frame it as “expensive” or “cheap” relative to some arbitrary anchor. Automation skips that frame entirely. Money goes in, shares come out, and you never have to decide whether today’s price is “good.”

5. Calculate Your Return Per Day Held

Here is a frame that makes long-term investing feel like getting paid. Take your total gain and divide it by the number of days you have held XEQT.

For example: $24,900 gain over 5 years is approximately 1,825 days, which works out to about $13.64 per day. Every single day, including weekends, your portfolio earned you $13.64 for doing absolutely nothing. Bad days included. Market crashes included. That is the frame of a long-term investor.

6. Reframe Dips as Discount Days

When XEQT drops 3%, you have two framing options:

• Frame A: “I just lost 3% of my portfolio.” (Loss frame – triggers fear and selling.)
• Frame B: “XEQT is on a 3% discount today.” (Gain frame – triggers buying or at minimum, holding.)

Both are true. But only one of them helps you build wealth over 20 years.

7. Keep a One-Line Investment Journal

At the end of each month, write one sentence about how your portfolio made you feel. After a year, read them all in sequence. You will see a pattern: the months that felt terrible were usually followed by recovery, and the months that felt amazing were often followed by pullbacks. The journal reframes your experience from “a series of emergencies” to “a predictable cycle” – which is exactly what it is.

7. The Ultimate Reframe

If I could tattoo one sentence on the inside of every XEQT investor’s eyelids, it would be this:

“Am I still contributing? Then a dip is a sale, not a crisis.”

This is the master reframe. It transforms every negative frame into a positive one. The market drops 5%? You are buying XEQT at a 5% discount with your next automatic contribution. Your portfolio shows a $4,000 unrealized loss? That means your next $500 contribution buys more shares than it would have last month.

The framing effect only has power over you when you forget the most important context: you are an accumulator, not a retiree. You are buying, not selling. And for someone who is buying, lower prices are objectively, mathematically, inarguably better.

Think of it this way. If you were buying groceries every week and the price of everything dropped 10%, would you panic and stop eating? Would you call a financial advisor? Would you read frantic headlines about the “grocery crash” and wonder if you should stockpile your money under a mattress instead?

Of course not. You would buy the same groceries, feel good about paying less, and go on with your life.

XEQT works the same way. Until you are retired and withdrawing, every dip is just groceries going on sale.

8. Back in the Parking Lot

Let me take you back to that Loblaws parking lot. After I zoomed out from the daily view to the yearly view, something shifted. Not just in what I saw on the screen, but in how I understood what investing actually feels like from the inside.

The daily frame had told me a story about loss. The yearly frame told me a story about growth. And neither one was lying – but only one of them was useful for making decisions about money I would not need for another two decades.

I put my phone in the center console. I drove home. I did not sell a single share. And over the next three months, that $1,847 daily loss was erased, absorbed, forgotten – a tiny wiggle in a line that kept sloping upward.

The framing effect will never go away. Your brain will always react more strongly to red than green, to dollar amounts than percentages, to dramatic headlines than boring ones. That is just the hardware you are running on, and you cannot upgrade it.

But you can choose your frame. You can zoom out. You can count shares instead of dollars. You can automate and stop watching. You can remind yourself that you are buying, not selling, and that buying at lower prices is a gift wrapped in scary packaging.

The market will keep serving you the same information in a thousand different frames. Your job is not to react to all of them. Your job is to pick the frame that keeps you invested.

Close the app. Go for a walk. Your XEQT shares will be there when you get back – and in 10 years, you will not remember what today’s daily return was. But you will remember whether you held.

This blog post is for informational purposes only and does not constitute financial advice. All investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. The referral link above may provide a bonus to both you and the blog author.