How is it possible for 2 people to look at a glass of water, and 1 person sees it as half full, while the other sees it as half empty? I’ve been investing/trading in the stock market for the last 13+ years, and it always intrigues me how a person is always bearish on the markets and expecting the worst thing to happen (Glass half empty). Why is that? Why are people always looking for the worst case scenario to happen? Why are they turned on when they see something that predicts end times? Perhaps this kind of thinking could be linked to our primitive part of the brain that tells us that we need to do whatever it takes to survive. Maybe that primitive part of our brain is wired to try and learn what the worst case scenario is, so that we can survive and live to fight another day.
What determines whether you’re an optimist or a pessimist? It seems easy to be a pessimist nowadays, when you feed your mind with negative news stories all day. I read somewhere once that Zeroedge gets over a million website visits every day. With those kind of numbers, it’s amazing that anyone even invests in the stock market. Perhaps if people stopped reading dooms day articles and watching financial television, they’d be able to tune out the noise and make prudent investment decision.
So why be an optimist? Why should you be optimistic about the world and the stock market? $10,000 invested in the S&P 500 in 1974 is worth about $337,808 today (Not including dividends)! Those are some pretty amazing numbers! Sure from 1974 until today, there’s been multiple bear markets, including the worst recession since 1929. Even after all that, the S&P is still up by more than +3387% since 1974… The number of listed companies in the U.S. stock market are near 20 year lows! This is creating a shortage of shares. Tight supply creates higher demand for a smaller number of stocks. Although the United States is growing slower than in past years, this isn’t the case around the whole world. Countries like China and Nigeria are becoming more and more prosperous. Corporate buybacks are near all time highs! This proves to me that stocks are trading lower than they’re actually worth. You won’t see data points like these on Zeroedge…
Thank you for reading!