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The Dilemma
Never Feels Good
The Dilemma
Quote from Morgan Housel
The Dilemma
Never Feels Good
A Money Question
Quote
“Save like a pessimist, invest like an optimist. Plan like a pessimist, dream like an optimist.” - Morgan Housel
There is this weird balance in life where being pessimistic pays dividends and being optimistic is a necessity. Two opposites meshing together to find an equilibrium. Investing and how you think about it is much the same way.
The Dilemma
I went to bed thinking that my next three years were going to be spent in Chapel Hill, North Carolina. It was the night before the signing deadline in 2009. The Detroit Tigers were offering me millions of dollars to sign and we said no.
You see we had clear expectations on what it would take to sign a professional contract out of high school and they weren’t meeting it.
The next morning, I woke up to my dad telling me they had met our number. You want to talk about a whirlwind of emotions. The next 30 days went by in a flash and before you knew it, I had enough money in my bank account to call myself a millionaire.
That is when a different set of emotions started to set in:
How would I protect this?
How should I manage this?
How much of this is reasonable to spend?
You see, I am by nature slanted to a pessimistic state. I live with a firm grasp on numbers and the odds of something happening. I knew the chances of me making it to the major leagues and signing a massive free-agent contract were slim.
That slant made me save like a pessimist but work towards my dream like an optimist.
You need both in your journey.
Today, I want to talk about how this same dilemma works in all of our financial lives.
Let’s dive in!
Never Feels Good
The first step to becoming financially unbreakable is spending less than you make. This leads to you saving money. That leads to you investing money. That leads to you having a safety net.
That leads to you becoming financially unbreakable.
To start saving money you have to take a pessimistic viewpoint. The lens that at some point you won’t be able to, have the opportunity to, or have the desire to earn the kind of money that you are earning today.
If you never saw the world through that lens there would be no point in saving any money.
The weird part comes after you save the money. You start investing it and the only lens in which the media provides you is the pessimistic one.
This war is going on.
This generational storm is hitting the coast.
This pandemic is like nothing we have ever seen before.
Sound familiar?
The challenge is to leave your pessimistic glasses at home and put on your optimistic glasses for your investing journey.
Year to date, the S&P 500 is up more than 23%. Yet, the past several months have been littered with everything that is going wrong.
The truth is pessimism sells and optimism gets passed over as being naïve.
Well, here are some facts that help those naturally titled towards a pessimistic viewpoint.
The best time to start investing was yesterday. Time and time again the market rewards those that stay engaged.
Simply missing the best 10 days over the past 20 years would have reduced your returns by more than 50%.
Compound those facts with the fact that the market is positive 73% of one-year periods and 94% of ten-year periods.
When James Truslow Adams coined the phrase “The American Dream”, that dream had never looked bleaker. It was 1931, unemployment was hovering at 25%, opportunity was scarce, and segregation was prevalent. Yet he was optimistic about the future. A future that in the moment would be easy to view through a pessimistic lens.
I tell you this not to tell you that everything in the future is all roses. I tell you this because history repeats itself and the truth is it never feels good.
It never feels good to invest. ~ “The market could go lower.”
It never feels good to stick with the plan. ~ “The world is innovating, shouldn’t we.”
It never feels good to do the boring thing. ~ “My neighbor is crushing it in XYZ investment.”
Yet, doing what never feels good is what makes a successful investor. The price you pay for future growth is current uncertainty. If we knew exactly how everything would play out, prices would reflect that. That is why optimism in investing is critical. You have to believe in a brighter future, even when the current reality looks bleak.
For 15 years of my investing career, rarely (if ever) has the economy been in a state where the news is overwhelmingly positive. Yet, the S&P 500 is up more than 159% over the past decade.
The goal is to become financially unbreakable.
To do that save like a pessimist and invest like an optimist.
A Money Question
What is one money lesson you learned this year?
Each week we have been talking through money concepts, frameworks, and strategies. Respond to this newsletter with one money lesson you learned this year.
Work with Jacob
I help athletes, entrepreneurs, and executives pay less in taxes, simplify their financial lives, and invest for the long run.
Until Next Time, My Friends
Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which JL Strategic Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.