Why It Pays off to Be an Optimist
You probably wouldn’t guess this since I write about personal growth and investing, but I’m mostly a pessimist by nature. I had to force myself to adopt optimism as my main view of life, but I can always feel the pull of pessimism.
What does it even mean to be an optimist or pessimist? In the world of philosophy, an optimist is a person who believes that good ultimately prevails over evil and that our world is headed in the right direction.
A pessimist is exactly the opposite. Someone who thinks evil ultimately wins and that the world is doomed. It’s just a matter of time before we self-destruct.
I don’t think people are 100% one way or the other. Most of us have both optimistic and pessimistic tendencies. For example, a lot of people have a very dark view of the future of technology or the climate. Those same people might be optimistic when it comes to green energy or the ability to educate others through social media.
My favorite book/movie in my teens was Fight Club, a story about anarchy and fighting the status quo. The moment I saw it, I could instantly relate to the view that Chuck Palahniuk had about life. He talked about not caring about what other people say or do, making your own plans, not being afraid of destruction, and so forth. It’s a pretty dark story.
The reason so many people are attracted to Fight Club, and similar dark stories, is because it’s close to reality.
If you look for evil, you’ll find it
If you look at the history of humanity, you’ll see violence, war, injustice, inequality, pain, torture, famine — all negative things. It’s a part of all our DNA. Our ancestors did bad things.
If you believe the world is bad, you won’t have a hard time finding evidence. There’s still a lot of suffering in the world. But here comes the kicker: There’s less suffering than a hundred years ago.
The world is no way near perfect, but it’s a little bit better than in the past. Just a little bit. And that tiny bit of improvement is the case for optimism.
While we don’t know exactly how many people are born optimists vs born pessimists, I assume the latter group is in the majority. And it probably has to do with your background. As a child of first-generation immigrants, growing up without much money, I’m not surprised I leaned more towards pessimism.
When life is hard, you tend to fall into a negative downward cycle. When bad things seem to happen to you and the people in your life, it’s hard to imagine things can be good. You need a really good reason to change your whole outlook on life.
Optimism will make your life better
And that reason is the promise of a better future. When you see examples of people who made something out of themselves from nothing, you have proof.
You can build a good life. You can get educated. You can get wealthy.
But you have to believe that the world is going in the right direction. As investors say, you have to be bullish on the future.
One of the main reasons Warren Buffett is successful is not because he’s the best stock picker in the world. He’s a good stock picker, but more than anything else, he’s optimistic and patient — a combination of personality traits not a lot of people possess.
While many other global investors scream fire and warn the world about major crashes and secular bear markets, Buffett has been optimistic for his (almost) 80-year investing career. And ever since the 1990s, when he started receiving global fame, he’s repeated one thing publicly: “Never bet against America.”
At the 2020 annual shareholders meeting of his firm Berkshire Hathaway, at the peak of the global Covid pandemic, he reiterated the same message. Buffett spent the first part of the meeting talking about all the good things that happened:
“In 231 years, nobody in his wildest dream would have thought that in the next three life times, the US will have 280 million people, aeroplanes will fly at 40,000 feet and have great hospitals systems. Everything has just exceeded anybody’s dreams.”
Optimists behave differently
Every long-term investor is an optimist. Otherwise, why put your money into real assets? When you adopt an optimistic perspective on the world, you behave differently.
You have faith in the future, so you invest in your education, maintain your health, and steadily invest in assets. You realize that the world keeps improving, and you don’t want to be left behind.
It’s a completely different way of living. And I must be honest, I slowly started changing my perspective over the past six years. But it wasn’t until 2020 that I went all-in with optimism.
Over the past 20 years, we’ve seen many crises, from wars to financial collapse, to a global pandemic. And humans as a group have kept improving throughout all these challenges.
It doesn’t require much imagination to realize we will keep improving.