I am a willing consumer of the “self-improvement” section of the bookstore. After two decades of reading these books, it occurred to me why the continuous reading of these style books is helpful. It’s because we have short memories and need constant reinforcement of these ideas if they are to become a reality.
As I have been writing this blog for almost three years, I believe this same benefit is accruing with regard to what I write and what I hope readers take from my site.
Josiah Gilbert Holland said, “A mind grows by what it feeds on.”
As a non-financial example, nobody would say that eating fast food for every meal is healthy just because it’s food. And yet, we feel we are being prudent by consuming today’s market “news” as if every article offers equivalent nutritional value. Invariably, this can’t be true.
I believe the more bad news we consume, the more likely we are to make poor portfolio choices. In contrast, the more historically relevant information we consume, the more likely we are to stay the course.
If you continually believe the sky is falling, the other shoe is about to drop, or any other cliche you can think of, then that is likely the type of investor you are. And by extension, your investment portfolio will probably reflect your pessimism.
But if you believe in sticking it out for the long term and that the future is brighter than the present, then you will seek out news confirming your bias. Not surprisingly, I fall into this second camp primarily because it’s the only version that squares with history. Personally, I chuckle every time I read market headlines because of the presumed importance of the daily news cycle. If history is our guide, it’s not all that important.
Here’s the thing though. The short-term is almost always pessimistic because it’s evolutionarily smart. We need to protect ourselves. And the long-term is almost always optimistic because it’s evolutionarily smart. We seek better for ourselves, therefore, things get better over time.
Those two viewpoints can be concurrently true.
As Morgan Housel titled a recent essay, there are “Lots of Overnight Tragedies, No Overnight Miracles.” Persistently pessimistic viewpoints are always at odds with human progress, or as I like to say, at odds with reality.
The number one reason I write what I write is because I believe the historically accurate version of optimism is rarely offered by the mainstream media. This is despite the fact that human progress is what has determined the “up-and-to-the-right” trend of the last century of market performance. But it takes effort to find news that offers that historical perspective.
Pick any news site and it looks like the comedic parody site The Endless Doomscroller. Seriously, click the link and you’ll see a sampling of what every news headline - financial and non-financial - looks like.
I believe we find exactly the type of news we are looking for. The fact that being an optimist these days is so countercultural is striking given our history. Everything always seems like it’s in the toilet even when it’s not. We must remember that things will keep getting better, if for no other reason because people are always desiring better for themselves and better for their family.
As broken as our democracy seems from time to time (always?), we are still the source of hope for people who want more for themselves. People who live in oppressed countries still look to America for opportunity even if, unfortunately, hate and oppression continue to operate on our home soil.
But that’s a very small portion of our population. The 5% of crazy people on both sides get all the press coverage because it gets clicks. As a result, the 90% of us who operate with common sense and decency are seemingly invisible. We quietly go about our days trying to make our tomorrow brighter than it is today. With that being our true north, I can’t imagine anything other than continued forward progress over the decades to come.
In much the same way that eating just one healthy meal won’t make us healthy, we need to continually feed ourselves a healthy diet of positive/optimistic/realistic news that adds historical perspective in both good markets and bad markets if we desire to make smart long-term financial decisions.
If nothing else, I hope this site is one you can rely on to keep you thinking positive about our future, positive about the ultimate direction of your portfolio, and helps you to stay the course!
Thanks for reading,
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This post is not advice. Please see additional disclaimers.