Today I want to address what I believe is the very core for successful financial behavior – an optimistic disposition.
2016 is a great example of why it is so important to have an optimistic perspective. The optimists “won” and pessimists “lost”… again. Whether attempting to follow financial folklore such as, “as the first week of January goes, so goes the market for the year”, or that saying “sell in May and go away”… speculators who believe in superstition and let it influence their actions are bound to fail. This pessimism is bad behavior, and it happens far too often. The constant belief that the world is about to end isn’t good for your finances, and I imagine takes a toll on your health as well.
With a little perspective, it’s easy to be optimistic. America has the best hand ever dealt to any country on earth. Americans do not fully appreciate it. We have peaceful and wonderful neighbors to the north (Canada) and the south (Mexico). We have the largest military barriers ever built – called the Atlantic and Pacific oceans. We have all the food, water and energy we need. We have the best military on the planet and we will so long as we have the best economy. A strong economy supports the best military.
We have the best universities on the planet, the best healthcare. We educate most of the kids who want to start new businesses around the world. We have the rule of law which is exceptional. If you create something, or own something, it is yours. This is something other countries would “die for”; we did. We have an incredible work ethic; innovation is in our DNA. We have the widest, deepest financial markets ever seen. It is extraordinary – absolutely extraordinary – and we have all this here, today, right now.
Is it any wonder why optimists “win”?
Pessimism, on the other hand is easy. I actually think it takes less energy to be pessimistic. Pessimists have always turned out to be terribly wrong. Just look at your lifetime and try to recall all the crises you’ve encountered. I bet most of them are hard to remember. Then look at where we are today. Better, stronger, more capable, and with more resources and opportunities than before. Which side would I bet on with this perspective? A pessimist or an optimist? The answer is clear. But taking the right action is hard.
Investing in great companies working to provide value to their customers with integrity and a profit motive is the right course. Since 1935 the US population has gone up 2.5 times, but real GDP has risen 17 times. That is an increase in real per-capita GDP on a scale never experienced in a country. It’s treated optimists very well.
Bottom Line: optimists win.
If you would like to have a conversation about the perspective of an optimist, or investor behavior, contact us.
Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with unbiased investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Performance referenced is historical and is no guarantee of future results. Investing involves risk, including the risk of loss.
In my decade plus time advising clients, I have seen this truth—my most joyful clients are my most successful investors. Not the other way around. The rewards follow the joy, not joy the rewards. They view the future as bright and invest faithfully in it knowing that no amount of market return will ever be able to generate an internal joy, but that prudent stewardship and a long-term perspective can perpetuate the upward spiral of joy.