Optimism Makes You Sound Stupid
“For reasons I have never understood, people like to hear that the world is going to hell,” economic historian Deirdre N. McCloskey told the New York Times in April 2023.
If you say the world has been getting better, you may get away with being called naïve and insensitive. If you say the world is going to go on getting better, you are considered embarrassingly mad. If, on the other hand, you say catastrophe is imminent, you may expect a McArthur genius award or even the Nobel Peace Prize. Matt Ridley, from his book, “The Rational Optimist”
In a recent podcast on the Pilot Money Guys, we covered one of my favorite topics – Reasons to be Optimistic. Check out the podcast- Flight #57 for the Top Ten Reasons to be Optimistic about the Future.
As I read and prepared for our discussion on the podcast, I was fascinated by what the research has to say about why most of us are naturally wired to be somewhat pessimistic. Interesting note: because of that wiring, pessimists tend to live longer too! (Inc. “The Quirky Reason That Pessimists Tend to Outlive Optimists, According to Neuroscientists)
On the other hand, being a pessimist can be a drag on your quality of life. Who wants to live a longer, more miserable life? Plus, every news agency in existence works really hard to capitalize on our natural bias toward pessimism, which tends to exacerbate pessimistic feelings. Have you seen any good news in your Google newsfeed lately?
Luckily, we get to choose our outlook on life. However, in this day and age, it takes serious intentionality if you want to stay positive. If we don't make serious efforts to stay somewhat optimistic, we can become a negative influence on the people we care most about in our lives. I'm not saying we should be naive and ignorant of what's going on around us, but overwhelming, negativity can leak into other aspects of our personal and professional lives.
Admittedly, I struggle sometimes as well. For example, I work really hard to be a positive influence and say encouraging words to our young kids – even when they leave a trail of messes wherever they go! (See, I went negative.) Studies show that saying five positive things for every correction is the best balance for raising healthy children. That's not easy with our children sometimes, but maybe we could apply that rule to everyone in our lives – even those with whom we fly!
Optimism is a Secret Weapon in Investing:
“…if you’re optimistic, you’re more likely to stick with your plan, and markets have tended to reward people who have stuck with it over the longer term. But it’s hard to be optimistic about the long term given how unknowable things are…” – Morningstar’s Christine Benz
Why am I talking about optimism regarding investing and your quality of life? What good is a fancy-schmancy investment portfolio if we're constantly feeling stressed out due to negativity and pessimism? Money, investments, and financial planning are simply a means to an end. That end is living a contented, joyful, and fulfilling life now, as well as in retirement.
When an investor loses faith and no longer believes companies know how to innovate, solve problems and make profits, they will sell their investments at the first sign of trouble because they do not believe the current state of economic and market difficulties can be overcome. Unfortunately, this results in a pattern of selling investments when they are down and buying them when they are high.
I believe that once a person loses all optimism and hope in basic human ingenuity, they should no longer invest in equities. We must maintain a basic belief in our ability to create businesses, products that solve problems and add value to consumers. These companies in turn add value to stockholders by sharing in their profits. Optimism and a little bit of faith in human problem solving are what allow capital markets to survive and thrive.
We Can Train Our Brains to be More Optimistic
The good news is we can learn how to be more optimistic. Here are a few ideas: (adapted from an article written by Brianna Steinhilber at NBCnews.com)
“Science shows that those with an optimistic outlook have better cardiovascular health and a stronger immune system, earn a higher income and have more successful relationships.”– Brianna Steinhilber
- Take a look at the bright side.
- Even when there is bad news or difficult circumstance, we can always find a reason to be grateful and positive.
- Research shows seeing events in a positive light can “…train our brains to fire up circuits in different regions, eventually altering our response to negative experiences.”
- You become the average of the five people you hang around with most.
- Negativity is contagious. Luckily, positive emotions can be contagious, too.
- Turn off the news.
- News media outlets must sell commercials to stay in business and be profitable. If it “bleeds, it leads!”
- I recommend reading the news instead of watching it on your device or TV. This can help remove the negative emotion.
- Journal or write down what you are grateful for.
- “…writing down what you’re grateful for comes with some pretty impressive physical benefits as well, including better sleep, improved heart health, reduced aches and pains, and fewer depressive symptoms.”
- Acknowledge what you can and cannot control.
- None of us deal well with uncertainty. However, acknowledging that there are things beyond our control can provide a sense of freedom and relief.
- Acknowledge the negative.
- There is a good reason we all tend to be a bit pessimistic at times. It helps us find and solve problems that could hurt us.
“Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.” – Helen Keller
Sources and Links:
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