Optimism is way more fun.

I find it fascinating that despite the fact that the world is getting better for most of the people, most of the time, we have a relentless bias to gloominess.  I have written about this recently for my clients. Pessimism is very pervasive.  Even though optimism is the only thing that squares with this historical record, studies have shown that people actually believe that pessimists are smarter than optimists.  It makes some sense if you think about it - if I stood in front of a crowd of people and predicted the next crisis based on a bunch of complex factors, you are going to think 'wow, she really knows what she is talking about'.  If I stand in front of you with a prediction that over the next 20 years, the stock market will continue to do exactly what it has always done (go up and down, but mostly up), you would probably dismiss me as not knowing that much.

As Morgan Housel wrote in a recent piece - pessimists are intellectually captivating and optimists are oblivious suckers.  Harvard professor Teresa Amabile showed in a study that those publishing negative book reviews are seen as smarter and more competent than those giving positive reviews of the same book.  Pessimism sounds profound, optimism sounds superficial.

And it's a shame because being a pessimist has never paid off for very long.  Focusing on the negative certainly keeps people out of the stock market.  It's very hard to invest in companies if you think the world is going to end.  And over the long-run, NOT investing has a devastating impact.

I like being optimistic.  It fills me with excitement when I think about all the amazing ideas that humans have not yet thought up.

Do you know about the 'Great Horse Manure Crisis of 1894'?  Well, in 1894, The Times newspaper predicted that "in 50 years, every street in London will be buried under nine feet of manure."  This impeding catastrophe was debated in 1898 at the world's first international urban planning conference in New York, but no one could come up with a solution.

By 1912 we had motorised vehicles on the streets, something no one in the room in 1898 could have imagined.  The 'Great Horse Manure Crisis' had been averted.

I don't know what life will be like in 50 or 100 years, but I do know that the only way to benefit from and capture all of the amazing, 'not-yet-thought-of' ideas is to own companies.  A really nice, diversified pot of the best companies in the world - aka 'the stock market' - is the perfect way to go.  It's going to go up and it's going to go down, but over the long run you will be very glad you own it.

And you know what, being optimistic is a way more fun way to live your life, don't you think?

"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?” - Thomas Macaulay

Need help investing your hard-earned money?  Drop me a line, I would love to help you.