Optimism and pessimism are difficult to handle.
Pessimism is important for survival, and it assists us get ready for threats before they show up. But optimism is similarly important. The belief that things can– and will be– much better even when the proof is dirty is among the most vital parts of whatever from a sound relationship to making a long-lasting financial investment.
Optimism and pessimism appear like clashing frame of minds, so it’s more typical for individuals to choose one or the other.
But in my book, “Same as Ever: A Guide to What Never Changes,” I blog about why understanding how to stabilize the 2 has actually constantly been– and constantly will be– among life’s crucial abilities.
Successful individuals discover a balance in between pessimism and optimism
In 1995, he was asked by Charlie Rose why he kept so much cash on hand. Things change so fast in technology that the next year’s business wasn’t guaranteed, he said — “including Microsoft’s.”
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In 2007, he reflected: “I was always worried because people who worked for me were older than me and had kids, and I always thought, ‘What if we don’t get paid? Will I be able to meet the payroll?'”
Here, optimism and confidence is mixed with heavy pessimism. What Gates seems to get is that you can only be an optimist in the long run if you’re pessimistic enough to survive the short run.
Why you should strive to be a ‘rational optimist’
An important thing to recognize here is that optimism and pessimism exist on a spectrum.
At one end, you have the pure optimists. They think everything is great, will always be great, and see all negativity as a character flaw. Part is rooted in the ego: they’re so confident in themselves they can’t fathom anything going wrong.
At the other end, you have pure pessimists. They think everything is terrible, will always be terrible, and see all positivity as a character flaw. Part is rooted in the ego: they have so little confidence in themselves they can’t fathom anything going right. They’re the polar opposite of the pure optimist, and just as detached from reality.
In the middle is the sweet spot, what I call the rational optimist: those who acknowledge that history is a constant chain of problems and disappointments and setbacks, but who remain optimistic because they know that setbacks don’t prevent eventual progress.
They sound like hypocrites and flip-floppers, but often they’re just looking further ahead than other people.
So the trick in any field — from finance to careers to relationships — is being able to survive the short-run problems so you can stick around long enough to enjoy long-term growth.
Save like a pessimist and invest like an optimist.
Plan like a pessimist and dream like an optimist.
Those can seem like conflicting skills. And they are. It’s intuitive to think you should either be an optimist or pessimist. It’s hard to realize that there’s a time and place for both, and that the two can — and should — coexist.
But it’s what you see in almost every successful long-term endeavor.
Morgan Housel is a money expert and the author of “The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness” and “Same As Ever: A Guide to What Never Changes.” A partner at The Collaborative Fund and former Wall Street Journal contributor, he is a two-time winner of the Best in Business Award from the Society of American Business Editors and Writers. Follow him on Twitter @morganhousel
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