When I first started to trade professionally, I remember an old trader telling me that the bears will most always sound smarter than the bulls. In fact, he told me that the bulls are often referred to as cheerleaders. I’ve thought about those comments many times through the years and have heard many veteran investors and traders confirm the same remarks.
There’s no question that doom-and-gloom sells, just ask the media… if it bleeds it leads. I argue that people are predisposed or more naturally wired to believe the bears. The bears are constantly looking in the rearview mirror and using actual data points and historical references to back up their arguments. They point toward proven numbers and data that people can see, look at, and believe. This often allows the bears to sound much more intelligent and believable than the bulls.
Bulls on the other hand are always trying to look out of the front windshield and somewhat predict the future. Unfortunately, many are taking big guesses about what is ahead and talking about things we have never heard of or seen before and this makes it seem like there’s a lot of hope and wishing involved in their forecasts.
I’ve realized a new reason why pessimism sounds smart: optimism often requires believing in unknown, unspecified future breakthroughs—which seems fanciful and naive. If you very soberly, wisely, prudently stick to the known and the proven, you will necessarily be pessimistic.
No proven resources or technologies can sustain economic growth. The status quo will plateau. To expect growth is to believe in future technologies. To expect very long-term growth is to believe in what often feels like science fiction.
No known solutions can solve our hardest problems—that’s why they’re the hardest ones. And by the nature of problem-solving, we are aware of many problems before we are aware of their solutions. So there will always be a frontier of problems we don’t yet know how to solve, and a group of cheerleaders who believe they can make it happen. (Source: The Roots of Progress)
For me, the question is do you want to be a doom-and-gloomer who sounds smart or an optimist who sounds like a cheerleader? I personally want to see myself as being more of a cheerleader trying to stay optimistic about the future. But I understand as I age and many of my friends age we are finding ourselves on a slippery slope to becoming bigger bears.
I suspect it’s just natural that we become more bearish and pessimistic as we get older, as each day passes it seems to be more out with the old and in with the new. In other words, as we get older all of the things we once knew for certain start to be challenged or replaced with the new. As more and more things change we start to feel like we are losing some of our control and this makes us a bit more uncertain and less confident about navigating the future, hence we become more worried and concerned and the bear inside us all starts to get larger and larger. I guess it’s just a natural evolution and each of us has to decide if we want to fight it or allow ourselves to be pulled in that direction. Here’s to the young bulls and the old bears!