PESSIMISM
“How much pain have cost us the evils which have never happened.” Thomas Jefferson
“There are so few bulls that I can’t imagine who’s going to impregnate the cows.” Julian Robertson
“Our fears are always more numerous than our dangers.” Lucius Annaeus Seneca
“Fear is our most basic emotion.” Peter Bevelin
“When we are afraid we do not see clearly.” Hans Rosling
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." Winston Churchill
"I've suffered a great many catastrophes in my life. Most of them never happened." Mark Twain
“By what principle is it that when we see nothing but improvements behind us, we are to expect nothing but deterioration before us?” Thomas Babington Macauley, 1830
“Take counsel on your fears, but don’t be controlled by them.” Dickson G Watts
“Our brains are wired in such a way that we are naturally highly receptive to risks. Anthropological history would argue this is because our ancestors were always on the lookout for predators, since their chances of being killed by animals or other human beings were once (and for many centuries) very high. A portion of the brain—the amygdala—screens everything for negative news. Therefore, humans are wired to pay 10 times more attention to negative news than positive news.” Wolfgang Fengler
“The greatest trick the devil ever played was making you believe that the pessimists are the good guys.” Packy McCormick
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” Benjamin Graham
“Of all the losing investment approaches out there, that of being a pessimistic trader must be the most certain to lead to disappointing returns.” Nick Train
"I would say that at any given point in history, including when stocks were their cheapest, you could find an equally impressive number of negative factors. I mean, you could’ve sat down in 1974 when stocks were screaming bargains, and you could’ve written down all kinds of things that would’ve caused you to say, you know, the future is just going to be terrible. And similarly, at the top, you know, or anytime, you can write down a large list of things that would be quite on the bullish side. We really don’t pay any attention to that sort of thing. I mean, we have, you might say that our underlying premise — and I think it’s a pretty sound underlying premise — is that this country will do very well, and in particularly, it will do well for business. Business has done very well." Warren Buffett
"When investing, pessimism is your friend, euphoria the enemy." Warren Buffett
“Fear and pessimism bring opportunities.” Michael Price
“Whatever men attempt, they seem driven to try to overdo. When hopes are soaring I always repeat to myself ‘Two and two still make four and no-one ever invested a way of getting something for nothing’. When the outlook is steeped in pessimism I remind myself, “two and two still make four and you can’t keep mankind down for long.” Bernard Baruch
“Could anyone really believe the earth was going to swallow up the incredible productive assets and unlimited human ingenuity existing in America?” Warren Buffett [on the financial panic of 2008]
"We find it helpful to read historical writings in times of pessimism in order to keep current events [2009] in perspective. Abraham Lincoln wrote in 1859: ‘It is said an Eastern monarch once charged his wise men to invent him a sentence to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: 'And this, too, shall pass away.' How much it expresses! How chastening in the hour of pride! How consoling in the depths of affliction!" Francois Rochon
“People are always predicting the end of the world, but the only things that end are the people; the world keeps going.” Arnold Van Den Berg
“One needs to be an optimist in times of maximum pessimism.” Sir John Templeton
"The bear market is where I do well because I am an optimistic contrarian. If a lot of people become pessimistic, I become bullish, and vice versa." Roy Neuberger
“It is much easier to make money when the world is depressed, because when it stops being depressed, it’s like a compressed spring that comes back.” Howard Marks
“Times of universal pessimism usually represent remarkable buying opportunities, and times of buoyant optimism are often a clarion call to sell.” Leon Levy
“Our advice is ignore the pessimists. I think humans are naturally wired to look at everything that can go wrong and we tend to miss what is good, which dominates most of the time. You watch the news and all you see is crises. Yet when you look back over the 20th Century and into the 21st Century you find out things end up working really well.” Kurt Winrich
"People are always asking me where the outlook is good, but that’s the wrong question. The right question is: Where is the outlook most miserable?" Sir John Templeton
“In times of general market pessimism, this kind of ‘undiscounting’ of some of the very finest investments can reach rather extreme levels. When it does, it affords the patient investor, with the ability to distinguish between current market image and true facts, some of the most attractive opportunities common stocks can offer for handsome long term profits at relatively small risk.” Phil Fisher
“The most common cause of low prices is pessimism – sometime pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.” Warren Buffett
"To have good opportunities of enrichment, we therefore need a climate of pessimism that brings good businesses to prices well bellow their intrinsic value. The higher the pessimism and related market fluctuations better are the opportunities to enrich ourselves. So the next time someone asks you ‘does the stock correction affects you?,’ you can answer: ‘Certainly, it improves my chances of getting richer.’” Francois Rochon
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” Sir John Templeton
"You can have cheap equity prices, or you can have good news, but you can’t have both.” Leon Cooperman
"We rarely are able to identify fundamentally good businesses at acceptable valuations when everything is going right at the company." Jeffrey Ubben
“Bear in mind it is the hard reality of investment life that it is almost impossible to have both cheap valuations and good news.” Barton Biggs
“When things look bleak there’s a great opportunity for everyone.” Mario Gabelli
“Fear has a greater grasp on human action than does the impressive weight of historical evidence.” Jeremy Siegel
“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell." Sir John Templeton
"Situations in which the consensus opinion is most likely to be incorrect are typically marked by excessive pessimism and uncertainty. This is often in the case of industries ignored, misunderstood, in transition or out of favor with investors. The best investment opportunities typically result when headlines are negative and fear and panic abound. In such situations, entire industries can sell off with little regard to the competitive dynamics among industry players." Jake Rosser
"The skittish investor, no matter how intelligent, is always susceptible to getting flushed out of the market by the brush beaters of doom." Peter Lynch
"Buy when most people .. including experts .. are pessimistic, and sell, when they are actively optimistic." Ben Graham
“Other things being equal, we’re better off buying into the market, or an individual business, when market sentiment is relatively pessimistic.” Bill Stewart
“It’s a more productive frame of mind to be a successful investor than to be, certainly, a perpetual bear. People who are pessimistic and cynical, I observe, don’t do particularly well in this industry.” Nick Train
"Unhealthy investor behaviour typically leads to selling during periods of great pessimism and leaping in at the top of bubbles. Such emotional decisions can wipe out years of gains achieved through compounding." Chris Davis
"Skepticism and pessimism aren’t synonymous. Skepticism calls for pessimism when optimism is excessive. But it also calls for optimism when pessimism is excessive." Howard Marks
"We are in agreement with Sir John Templeton who used to say he liked pessimism because of the prices it produced." Frank Martin
"It sounds simple, but as anyone who has invested knows, moods are powerful, and it is not easy to buy in a period of profound pessimism, even if your mind tells you a particular moment could be the buying opportunity of the decade. For one thing, all your friends are doing the opposite. For another, pessimism is based on plausible arguments. Although, you might tell yourself the bottom is at hand, you can never know that for a fact. Playing the market is not a science, and the market is not characterised by causal relationships. In the midst of panic, you might tell yourself it is highly unlikely for the market to fall further, but you can never say it is inconceivable. However tiny, this room for doubt is wide enough to permit fears to flow in and paralyse the investor." Leon Levy
"The real opportunities in any market of common stocks will occur when it is the investors who carry the pessimism." Michael Burry
"I like pessimism - for political reasons or whatever. I love it when other people sell their stocks to me for non-intrinsic-value-related reasons." Francois Rochon
“Pessimism is intellectually seductive in a way optimism only wishes it could be. Tell someone that everything will be great and they’re likely to either shrug you off or offer a skeptical eye. Tell someone they’re in danger and you have their undivided attention. Hearing that the world is going to hell is more interesting than forecasting that things will gradually get better over time, even if the latter is accurate for most people most of the time. Pessimism can be hard to distinguish from critical thinking and is often taken more seriously than optimism, which can be hard to distinguish from salesmanship and aloofness.” Morgan Housel
"Our enthusiasm is negatively correlated with the mood of the markets; we like the price of fear and uncertainty." Christopher Begg
"You should never forget two things: First, widespread fear is your friend as an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be unwarranted." Warren Buffett
"The error is clear. The herd applies optimism at the top and pessimism at the bottom. Thus, to benefit, we must be skeptical of the optimism that thrives at the top, and skeptical of the pessimism that prevails at the bottom.” Howard Marks
"Because bad news sells, the media has a pessimistic bias. Over many years, a large percentage of the severe problems predicted by the media never materialised, or proved to be far less severe than predicted." Ed Wachenheim
"Pessimism is usually just extrapolating bad events without considering the offsetting reactions that push things in the other direction. That’s why it’s often wrong." Morgan Housel
"If you look at the shelf of market-wisdom books of the last quarter century you find that a large number of them, and some of the most successful, have been those predicting imminent disaster. They all predicted doomsdays that never arrived." Ralph Wanger
"Because it is new and unforeseen, the present crisis always looks worst than the previous ones. I keep preciously old articles from 1962, 1974, 1982, 1987 and 1990 to remind myself how gloomy the future looks in the depressive phases of the stock market." Francois Rochon
"The truth is, on balance, we will do more business when people are pessimistic. Not because we like pessimism, but because it makes for prices that are much more attractive. If you all have filling stations to sell in South Bend, I want to do business with whomever is most negative about filling stations. And that's where I'm going to make the best buy." Warren Buffett
“There is a tendency for smart people to caution and pessimism, but I think it’s a demonstrably a very dangerous tendency because over time equity markets have gone up a lot. I have also observed that pessimism messes people up and messes up their careers. I’d rather that didn’t happen so I stay optimistic.” Nick Train
“The forecaster always sounds more serious and smarter if he or she is cautious and expresses concerns about the risks that are always lurking about.” Bill Miller
“Permabears make money from newsletters and speaking fees, not from being right.” Ian Cassel
“Bulls make more than bears, so if anything be an optimist about life and about things in general is a great attribute as an investor. You just can’t be starry eyed and naïve.” Stanley Druckenmiller
“Part of the reason pessimism is more seductive than optimism is because, despite an awareness of how powerfully things have changed in the past, it’s easy to underestimate our ability to change in the future. Psychologists call this the end of history illusion. In people it’s a tendency to underestimate how much your tastes and preferences will change in the future. When you combine this quirk with markets’ propensity to be in wild states of unsustainable highs and lows, pessimism reigns because it’s easy to underestimate how those crazy states will ever adapt or revert to the mean. If you extrapolate college tuition growing at 10% a year for another 20 years, it looks insane and you’ll be pessimistic. Extrapolate current government deficits as far as you can see and we’re in trouble. Extrapolate negative growth during a recession and you’ll want to build a bunker. But the whole history of economics is a story about things adapting and reverting. Newton’s third law applies to economics: For every reaction – rising price, falling price, higher margin, lower interest rate, whatever – there is an equal and opposite reaction. Somewhere. To someone, who will eventually have enough sway to move things in the other direction or figure out a more palatable option. Underestimating adaptation and reversion to the mean is the greatest cause of pessimism. If you can stick around long enough to stomach the adaptations, optimism should virtually always be the default assumption.” Morgan Housel
“We think that being bearish is a losing bet in the long run then it makes more sense to be bullish perpetually, even though it makes you look very dumb.” Nick Train
“We have chosen optimism and the belief that our civilization is fundamentally progressing. While prudence frames our approach towards stock selection, we have so far been rewarded for maintaining a constructive attitude.” Francois Rochon
“We are optimists. In a world where limiting volatility and avoiding downside is the dominant investor mentality, we focus unashamedly on the drivers and implications of corporate success.” James Anderson
“In our experience, we find optimists most often win the day. Skepticism is inherently valuable in investing, but I have found I need to engage skeptically with my pessimism not my optimism. Optimists are more likely to be persistent and have more imagination. Imagination would seem like one of the worst, if not harmful, investing traits to have - yet it opens up more what-if scenarios and adds balance to the prevailing pessimistic chorus.” Jake Rosser
“People are always worried about the economy and the world, especially since the financial crisis of 2008 and Europe’s sovereign debt crisis in 2011. I feel that people should learn to be optimistic because life goes on, and sometimes favourable suprises come out of the blue, whether due to new policies or scientific breakthroughs.” Irving Kahn
“Take a look at the long term chart of the S&P500. Every bull market you see, the remorseless accumulation of long term value is associated with new industries, new companies or the productivity gains brought by new technology. The ups and down’s of interest rates? Not so much. I’m sure that if you’re optimistic about technology and innovation, then you should be optimistic about equity markets. In that sense, markets are always cheap.” Nick Train
“Pessimism has never built anything and, as Robert G. Allen said: ‘Many an optimist has become rich by buying out a pessimist.’” Francois Rochon
"People who are pessimistic don’t do particularly well in this industry.” Nick Train
“I’ve seen very few people in the world accomplish anything unless they were optimists.” Bill Ackman
“At Baillie Gifford we are incurably optimistic; it comes from investing in growth equities where the opportunities are skewed to the upside.” Jenny Davis