March 25, 2022

The Principles of a Portfolio | Part VI — Optimism


Hello, and thank you for being here. In this section of episodes, we’re focusing on the principles of a well-constructed portfolio. But first, let’s settle our shoulders and take a deep breath.


Optimism is a key strategy for accumulating wealth. This might seem counterintuitive. Aren’t we meant to be pragmatists? Isn’t skepticism a safer financial strategy? Short-term the answer is yes. A high degree of skepticism can safeguard us against poor financial decisions. 

But long term, optimism is what safeguards us against a knee jerk reaction to a faltering market. And let there be no ambiguity here, the market will falter. In fact, to function properly, they must. Flowers can’t grow without rain. No rain, no flowers. Markets will fall, on average, they fall around 12% during each and every year. Feature not a bug. But markets always survive. What seems like outright disaster, given the vantage point of time, will inevitably turn out to be nothing more than a course correction. As Rumi said “Be patient when you sit in the dark. The dawn is coming”. Time heals all portfolio wounds. The short-term speculator has almost endless worries: inflation, valuations, politics, interest rates, wars, pandemics, and headlines. While the long-term investor has the antidote to such worries, time and patience to wait, combined with an optimistic view of human ingenuity. Knowing we always come back stronger.

This is the value of optimism. Do not bet against the world, bet with it. Trust in the torch of human innovation, ingenuity, and progress.  

What does it feel like to have faith in humankind, think about all the historical challenges human have overcome, also consider how in those moments how unsurmountable those challenges would have felt?  


As with all big decisions, there will be unnerving moments that cause you to question previous choices. But when it comes to a long-term investment strategy, it is calmness, faith and adherence to the fundamental principles that foster the accumulation of wealth. In the words of Timber Hawkeye, “You can’t calm the storm, what you can calm is yourself. The storm will pass.” With that in mind, as you move forward with whatever lies ahead, remember that wealth is a state of mind not a number.


The ideas in these episodes are not mine alone and are based on my learning of time-tested principles.  I am grateful for the work that has been done by people like Naval Ravikant, Eckhart Tolle, James Clear, Morgan Housel, Nick Maggiulli, Brian Portnoy, Derek Sivers, Carl Richards, Cameron Passmore, Benjamin Felix, Michael Kitces, and many others.

Data is calculated off rounded daily returns.
US Market is represented by the Russell 3000 Index.
Largest Intra-Year Decline refers to the largest market decrease from peak to trough during the year. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Investing risks include loss of principal and fluctuating value. There is no guarantee an investment strategy will be successful.


This content is for informational purposes only and should not be construed as advice or recommendation. Past performance does not guarantee future results. Please consult a licensed financial professional before making any investment decisions.