I understand the sentiment.
You can’t just hope and pray that everything you buy will always go up and to the right forever. You need a risk mitigation strategy and a plan in case something inevitably goes wrong.
But optimism is definitely an investment strategy. It’s my investment strategy.
No one knows what the future holds, but why invest for the long term if there is no hope that things will continue to get better?
Research also supports the idea that optimism can improve your life outcomes.
Shelley Taylor and Jonathan Brown argue that borderline delusional optimism can make you more successful.
They found that people with an unrealistically favorable view of themselves, exaggerated beliefs in their personal control over events, and unrealistic optimism about the future are more likely to persevere in the face of challenges and setbacks.
People with these traits tend to be happier, have greater social bonds, and have more motivation to improve their position in life.
Optimism can be good for your mental health, but it is also linked to your physical well-being.
For decades study about longevity, it turned out that optimism is linked to living longer. Both men and women who were highly optimistic were found to have a lifespan that was up to 15% longer.
Normally I’m skeptical of these types of studies because there are far too many variables to take into account. But these ideas also correspond to real-world experiences.
Bob Iger wrote about this in his book:
One of the most important qualities of a good leader is optimism, a pragmatic enthusiasm for what can be achieved. Even when faced with difficult choices and less-than-ideal outcomes, an optimistic leader does not give in to pessimism. Simply put, people are not motivated or stimulated by pessimists.
Optimism sets another machine in motion. Especially in difficult moments, those you lead must have confidence in your ability to focus on what is important and not operate from a position of defensiveness and self-preservation. It’s not about saying things are good when they’re not, and it’s not about conveying an innate belief that “things will work out.” It’s about believing that you and the people around you can drive for the best outcome, and not conveying the feeling that all is lost if things don’t get in the way. The tone you set as a leader has a huge effect on the people around you. No one wants to follow a pessimist.
Warren Buffett is the greatest investor of all time. He is an eternal optimist:
But without fail we have overcome [challenges to our country’s future]. Despite these obstacles – and many others – Americans’ real living standards improved nearly sevenfold during the twentieth century, as the Dow Jones Industrials rose from 66 to 11,497. Compare the history of this period with the decades when people made only small gains in the way they lived. Although the path has not been smooth, our economic system has functioned extremely well over time. It has unleashed human potential like no other system has, and will continue to do so. America’s best days lie ahead.
We are not in the midst of a crisis like the one in 2008, when Buffett wrote this. The stock market is within 2% of its all-time high. The bull market remains intact. The economy is still growing. There is an innovation boom.
But the rise of AI is causing a lot of foreboding about what the implications might be.
AI entrepreneur Matt Shumer wrote a blog post a few weeks ago that sent everyone into a frenzy about what it means for white-collar workers:
This week Citrini research published a piece of future fiction looking at how AI could cause mass unemployment, a stock market crash and a slowing economy:
These posts went so viral that they ultimately influenced the market. Entire sectors have been sold. The stocks crashed. People are afraid.
The most bearish predictions like this one always sounds plausible. Pessimism is a wonderful sales technique in a changing landscape.
I don’t completely hate these AI doomsday stories. No one knows what will happen in the future. It’s worth considering a range of outcomes, both good and bad. I don’t pretend to know what the impact of AI will be.
Anyone who knows for sure how this will turn out is probably wrong.
We could certainly see a bumpy transition period as companies integrate AI into their workflows. I would be surprised if many roles weren’t disrupted. I worry that people will be left behind by AI.
But I also think people aren’t considering all the potential benefits and unintended consequences of this innovation. More work and opportunities are created.
I still long for optimism, human dynamism and ingenuity.
It won’t always be easy, but our species has the rare ability to figure things out.
I remain optimistic about the future, even though I don’t know how it will turn out.
Further reading:
No one wants to follow a pessimist
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