Oh my, where has 2019 gone and what a year it has been, filled with drama, excitement and politics across the globe that defy belief. Who would have thought a couple of years ago that we would have Donal Trump and Boris Johnson running two of the most powerful democracies in the world? In SA , we continue to be bombarded with “negative news” and newsmakers are never short of stories to make us all rescind in horror, wondering why we haven’t  packed for Perth yet.

Even the springbok triumph at the Rugby World Cup and the #imstaying campaign don’t seem to be enough to lift our spirits, with our pension plans, house prices and other investments in SA underperforming over the past 5 years, relative to some of our global developed market counterparts. The below is an extract from Morgan Housel article published in January 2016 in the Motley Fool which puts our human traits of pessimism in perspective.

“For reasons I have never understood, people like to hear that the world is going to hell,” says historian Deirdre N. McCloskey. It’s hard to argue. Despite the record of tings getting better for most people most of the time, pessimism isn’t just more attention to than the optimism who is often viewed as an oblivious sucker”

In investing, a bull sounds like a reckless cheerleader, while a bear sounds like a sharp mind who has dug past the headlines – despite the record of the S&P 500 rising 18,000-fold over the last century. Wharton Professor Jeremy Siegel is often chided as a perma-stock-bull, blindly cheering for a higher market every time he goes on TV. But he’s done it since the early 1980s, a period in which the market increased in value 40 times over. Alas, few cares about past results when someone else is warning about The Next Great Depression.

 Here are a few other reasons Housel observed for why pessimism gets so much attention.

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

But that’s a wrong way to view optimism. Most optimism will tell you things will get ugly, that we’ll have recessions, bear markets, wars, panics and pandemics. But they remain optimistic because they set themselves up in portfolio, career, and disposition to ensure those downsides. To the pessimist a bad event is the end of the story. To the optimist it’s a slow chapter in an otherwise excellent book. The difference between an optimist and a pessimist often comes down to endurance and time frame.

• Pessimism shows that not everything is moving in the right direction, which helps you rationalize the personal shortcomings we all have. Misery loves company, as they say. Realizing that things outside your control could be the cause of your own problems is a comforting feeling, so we’re attracted to it.
• Pessimism requires action, whereas optimism means staying the course. Pessimism is “SELL, GET OUT, RUN,” which grabs your attention because its an action you need to take right now. You don’t want to read the article later or skim over the details, because you might get hurt. Optimism is mostly, “Don’t worry, stay the course, we’ll be alright,” which is easy to ignore since it doesn’t require doing anything.
• Optimism sounds like a sales pitch, while pessimism sounds like someone trying to help you. And that’s often the truth. But in general, most of the time, optimism is the correct default setting, and pessimism can be as big a sales pitch as anything – especially if it’s around emotional topics like money and politics.
• Pessimists extrapolate present trends without accounting for how reliably markets adapt. That’s important, because pessimistic views often start with a foundation of rational analysis, so the warning appears as reasonable as it is scary.

In short, the more we exude positivity, the better our chances of staying the course and sticking to a proven investment strategy. No market cycle lasts forever and let’s hope 2020 is the catalyst for better things to come in SA going forward.