The Rational Investor #046: Optimism & Investing
Happy Saturday to you,
Welcome to the 46th edition of The Rational Investor Newsletter.
I think it’s fair to say that enduring, long-term optimism is required for successful investing. While an optimistic viewpoint doesn’t necessarily ensure success, perpetual pessimism virtually guarantees failure.
With these thoughts in mind, this week’s incredible quote is on the topic of “tough-minded optimism.” It comes from an article titled The Road to Self-Renewal by John Gardner. It was published in Stanford’s Alumni Magazine in 1994.
Onto the main event…
Here’s John Gardner on Tough-Minded Optimism:
“For renewal, tough-minded optimism is best. The future is not shaped by people who don’t really believe in the future. Men and women of vitality have always been prepared to bet their futures, even their lives, on ventures of unknown outcome. If they had all looked before they leaped, we would still be crouched in caves sketching animal pictures on the wall.
But I did say tough-minded optimism. High hopes that are dashed by the first failure are precisely what we don’t need. We have to believe in ourselves, but we mustn’t suppose that the path will be easy. It’s tough. Life is painful, and rain falls on the just.
Mr. Churchill was not being a pessimist when he said, “I have nothing to offer, but blood, toil, tears and sweat.” He had a great deal more to offer, but as a good leader he was saying it isn’t going to be easy, and he was also saying something that all great leaders say constantly – that failure is simply a reason to strengthen resolve.
We cannot dream of a Utopia in which all arrangements are ideal and everyone is flawless. Life is tumultuous – an endless losing and regaining of balance, a continuous struggle, never an assured victory. Nothing is ever finally safe.
Every important battle is fought and refought. You may wonder if such a struggle, endless and of uncertain outcome, isn’t more than humans can bear. But all of history suggests that the human spirit is well fitted to cope with just that kind of world.”
I hope the parallels to investing here are obvious. With the change of just a few words, you could easily write a manifesto for successful investing.
I’ve long searched for a better word than “optimistic” when describing my feelings about the future because optimism, by itself, carries the appearance of ignorance or blatant disregard to the problems that we face.
I am most certainly not ignorant nor dismissive to the problems we face; I just believe with all of my being that our collective capacity to solve problems dwarfs the problems we face.
Thus, this idea of tough-minded optimism illustrates that I’m simply committed to maintaining my optimistic viewpoint even when it appears that everything is going south.
Because the inevitable truth is that things will go south from time to time. That’s the nature of the world we live in. But we need not be discouraged. Because just as Gardner states,
“…all of history suggests that the human spirit is well fitted to cope with just that kind of world.”
I couldn’t agree more. Revel in your tough-minded optimism, friends.
Thanks for reading. I’ll be back next week with more timeless wisdom from great investors.
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