Feb 08

Why the Pessimists Are Wrong (and They Are)

A recentĀ Motley Fool essay by Morgan Housel raises a question we have asked many times before: Why Does Pessimism Sound So Smart? (Especially when things are so good.)

Housel suggests several possible reasons:

1. Optimism appears oblivious to risks, so by default pessimism looks more intelligent.

2. Pessimism shows that not everything is moving in the right direction, which helps you rationalize the personal shortcomings we all have.

3. Pessimism requires action, whereas optimism means staying the course.

4. Optimism sounds like a sales pitch, while pessimism sounds like someone trying to help you.

5. Pessimists extrapolate present trends without accounting for how reliably markets adapt.

Generally, pessimism benefits from being both more serious than optimism and way cooler.

But that doesn’t mean it’s the right way to look at things!

Phil and Stephen provide numerous examples of how the pessimists get it wrong time after time, and why optimism is the most realistic and, yes, serious way to approach the world.

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