The Optimist Rules

“Perpetual optimism is a force multiplier.”

– Gen. Colin Powell

Optimism is an important factor to winning the battle, both in the field and in business. Today I want to go through why optimism is so important.

Without optimism you can completely miss enormous opportunities. Take the physiocrats, an 18th century group of French economists. They argued that the only way to create value in the world was through agriculture and that manufacturing produced no gain in wealth.

Imagine the new business owner who bought into this pessimistic view and shut down his operations. As we now know, not a great business strategy.

Around the same time, Adam Smith, the modern father of economics, wrote the Wealth of Nations. Here’s a contrasting, optimistic view from Smith:

“Five years have seldom passed away in which some book or pamphlet has not been published pretending to demonstrate … that the country was depopulating, agriculture neglected, manufacturing decaying and trade undone.”

I think we can say who won the day. But what’s fascinating is you can pick up on those very same themes today or even 20 or 50 years ago. It’s a little bit in our nature.

Fast forward 200 years and you find Nobel laureate Daniel Kahneman addressing how one of the factors in behavioral finance is negativity bias. Negativity bias says that you’re more likely to focus on negative events and give them more credibility than positive events.

Why would we do this? Why is it that over 60% of the words in the English language for emotions are for negative emotions? You would think we would have learned by now.

Well, we’re kind of wired this way. It’s part of the make-up of our brain. There’s this little almond-shaped group of nuclei in the center of our brain called the amygdala. It sits on top of the brain stem and all it does all day long is look for something to fear.

How can we combat this? We can’t exactly rewire our brain. A healthy dose of optimism, rational optimism, will help.

I recommend two books that can help you reinforce your optimism. One is a book by Matt Ridley called The Rational Optimist. It’s a great read, and Matt makes some very strong arguments why it makes sense to be a rational optimist today.

The second book is Abundance co-authored by Peter Diamandis. Peter is the fellow who, back in 1996, put together the X PRIZE. The prize was a $10 million award for the first privately funded group that could put a spacecraft carrying passengers into orbit around the earth two separate times within two weeks.

That prize was won in 2004 by one of the 26 groups that competed without government aid, spending a fraction of what you would expect.

The point here is that optimism is a huge driver to being successful in business. It’s the rational optimists, the ones that are oriented toward optimism, who make the biggest difference out there.

To jumpstart your optimism today, sign up for this blog and we’ll send you a copy of The Rational Optimist. It’s a great read.

Next time, we’ll address how optimism operates in our world.

So until next time, enjoy!

Send me your response, query or comment to gklaben@coylefinancial.com.