The Allure of Pessimism

As we enter emotionally charged presidential campaigns, we should prepare ourselves for an onslaught of pessimism. Election talking points tend to be more slinging mud about the other candidate than a candidate’s outline for future prosperity.  Why do they focus so much on the negative?

The Allure of Pessimism

The bottom line is that pessimism is an effective communicator. It results in a greater emotional response, which gets us to tune in and makes information easier to recall. You better believe politicians want us to tune in and remember their message. For them, it’s really a way to be more effective.

Pessimism is also influential because it relies on more immediate need than optimistic viewpoints, which often take a longer time to unfold. “Policy XYZ must be changed right now or else something really bad is going to happen.” Any sense of urgency, even if it is just an illusion or “fake news”, gets us to tune in.

Rising above the negativity

So, how can we rise above the negativity? There are two ways to help us avoid getting caught up in the pessimism and negativity we find all around us.  One is an avoidance strategy; another is filtering the information. We can avoid the negativity by simply turning it off. Consider taking a break from social media and avoiding sources that get you emotionally charged. Yes, this may not be easy but these are effective “strategic ignorance” strategies.

We can filter the noise by changing our time frame. Since negativity and pessimism is most influential over short periods of time, we can filter it by focusing on long-term outcomes. Sure, we may make policy mistakes in the short term, but we will correct them and make adjustments to achieve prosperity in the long term. This strategy can help us remain mentally sane and financially rational.

Taking the longer view

Investors that are influenced by short-term market moves can easily get caught up in it all. Those who focus on the long term don’t care if the market goes down X% over the next few months because they are looking far beyond that. This is one reason why I implore you to take the longer view – it’s better for your psyche and encourages more thoughtful and deliberate financial decisions.

Having a thinking partner

This is also why I emphasize my role as your “thinking partner”. Specifically, to help you put financial decisions into their correct context. My role as your thinking partner is invaluable exactly because I understand you, your goals, and your financial plan while filtering through the noise on your behalf to help you make wise financial decisions.

Financial success is NOT primarily correlated to intelligence. Instead, your financial success is directly correlated to your habits, behaviors, and ability to control your emotional response to money. And that’s exactly why a thinking partner is so important.

– Kaleb Paddock, CFP®

Learn More

You can learn more about Ten Talents and Kaleb, a financial advisor based in Parker, Colorado, here.

Kaleb can be reached at (303) 961-4397 or kaleb@tentalentsfp.com.

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©2020 The Behavioral Finance Network. Used with permission.