Pessimists look smart and optimists make money. Which one do you wanna be?
Howdy readers of the blog.
Sometimes I have a hard time understanding how you guys keep coming to my blog even though I update the blog rarely.
Thank you for coming!
I wanted to talk about optimism today and how it impacts to everything.
I have always been an optimist. I don’t have time to waste about anything that drags me back.
Pessimism would have pulled me back big time.
If I worried about the risks of anything, I would never immigrated to Canada.
When March stock market crash brought down my portfolios by 40-50%, I did not even flinch.
All I could think about in my extra time after 10+ hours of work from my day job was to take the most advantage of the discounts of the markets rather than crying over my net worth that got halved.
To be honest… I cried a bit in my mind but accepted the fate fairly quickly and was very confident that I would get back up again.
I have 2 older brothers and one of them is an extreme pessimist. He works at a tourism company which got devastated by Covid.
Korean government pay tourism companies to keep their employees so he has been getting paid almost full but he has been just too negative about the whole thing and extremely worried over his job…
His financial situations?
He has a fully paid condo (through diligent saving) and $100K in saving…
Yes, in saving… and the funds have been in saving even in Feb and March when I told him that this market crash is a once in a decade or two opportunity and would make him easy 30-40% returns within 1-2 years (it actually did within 5 months) but he was afraid and has kept the funds in saving account… that gives him 2% per year.
2 wrongs here.
First, He did not take advantage of the capital
Second, the more importantly, if someone’s fate is heavily dependent on a job, I would really re-look at life and do something to change.
If Covid took away my job, I would have thought that as an opportunity to move on.
Someone popular in investing said something like this
‘Pessimists look smart and optimists make money’
I don’t know who and probably I will never remember the name.
What’s important from that phrase is the message.
The nature of humans evolve. We all want things done better every day.
Look at how much progress we made in telecommunication.
If I look back just 20 years when I had colorful pagers and public phones to call back friends, my past myself won’t believe what I can do with my phone now.
What about cars? Not only cars are on electric but we will soon have fully self-driving cars.
Do you have Netflix account? It knows what I want to watch next by using AI.
The user experience of anything that we use is improving every day.
When I visited my home country- South Korea several years ago, I could not believe how much changes have been made.
The buildings were tall, flashy and architecturally beautiful.
Everything was so connected like crazy.
You can literally do anything with your smartphone.
Can’t find inconvenience anywhere.
If someone felt a bit of inconvenience then someone else already came up with a new product to made us feel convenient again and the changes were happening daily.
Everything needs to happen now.
What about Amazon?
Prime 2 days delivery.
Prime 1 day delivery.
Prime same day delivery.
Prime 2 hours.
Then eventually we will go towards ‘Prime before’
Amazon will know and send you the product before you even know you need it or worse ‘want it’
Think about many consumables like soaps, detergent, cereal, milk all that stuff.
I think we are in the greatest time ever to be an optimist.
Everything is so connected in this digital connected era where the growth can literally happen overnight.
What was the biggest market cap companies in 80’s? 90’s? 00’s? 10’s? I don’t have the data but probably like Walmart, Exxon all those companies.
They have been overtaken by these Microsoft, Amazon, Apple, Facebook, Alphabet and trust me companies like Exxon or Walmart will probably never overtake the top spots ever again.
Historically speaking, the markets have been rewarding investors since like many hundred years ago.
So why waste your time being a pessimist?
The more you are pessimistic, the more you will hesitate buying greatest companies of all.
Vicario told me many times. Don’t be cute. Just buy!
It is never about thinking about what can go wrong.
It is all about what can go right.
How likely that things can go right?
I think one of my readers asked me a while ago why he isn’t making money from stock markets.
I think everyone knows fundamentals are important. Like free cash flow, debt level, revenue growth, insider holding etc.
All very important stuff for sure but I think the one of the most important things that we need to understand are opportunities…
What are the opportunities for the company that you want to buy?
What can go right that gives you amazing returns?
If you focus on downside, you will be blinded to see the biggest opportunities of all times especially right now when things changes daily or even hourly…
If this does not work out, then I guess you will learn your lesson and move on (Just risk comfortable amount to lose)
There is no one can shame you if you get it wrong.
You are an individual investor and you only report to yourself.
You have tremendous advantage over hedge funds guys as they can’t take too much risk.
Their clients call if the hedge funds guys bought some random companies that they never heard of.
The clients want the hedge funds managers to have General Electric than a random Argentinian e- commerce company disrupting entire retail ecosystems in the countries they operate.
The hedge funds guys worry more about how angry clients would be if a great stock shows red for a few weeks to months before it takes off to sky.
It is your own money so you can take the risk and if you get it right, that will compensate for all the wrongs then some.
How to do it?
Be an optimist and don’t dismiss anything even if that makes you extremely uncomfortable.
You gotta be comfortable with uncomfortableness
You need to constantly evolve and think about why other people are doing well in the stock markets but you are not.
Why so stubborn?
If someone did better than you, then can you at least try to copy some of the ideas to see whether that works?
There are million ways of making money and get rich. You just need to find one that works.
If you found your style and has been working well then figure out how to strengthen your style further.
Don’t dwell on your past success because things around you are changing why aren’t you?
Again if you are not sure about the new thing that you just learned then risk the amount that you are wiling to lose.
What’s the setback?
A monthly worth of saving?
That may pay you yearly worth of saving if that works?
At the end of the day, you will at least learn your lesson and get to know yourself better.
Don’t dismiss anyone’s ideas even if you are more experienced and intellectually smarter.
Kids may make more money than us if they just buy stocks of the companies they love.
Remember Tesla? Netflix? Youtube? Spotify?
Shame on me for missing out on Tesla even though the company should never be on any fundamentalists radar. EVER!
Whoever dismissed Tesla because their number sucked and will suck for a while just missed 5000% returns.
Little kids wouldn’t have missed it and would have done tremendously better than us.
I read some time ago that a big hedge funds head guy put a relatively young guy in charge and made young guy’s bosses reported to the young guy.
The young guy did really well and is quite famous now. I forgot his name though but the point is sometimes you need to have young blood in you to make a simple but bold bet when times are right.
Look at the forest (Opportunities) before the trees (Numbers) then bulldoze the forest with Optimism. (Look… I kindly underlined, bold-ed and bracket-ed for you so you don’t miss it)
You will either make money now or learn your lesson that will make you money in the future.