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The Reasonable Optimist · Collaborative Fund

https://www.collaborativefund.com/blog/the-reasonable-optimist/

collaborativefund.com

The Reasonable Optimist · Collaborative Fund

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Cautiously Optimistic

Cautiously Optimistic

Our predictions usually seem to fall towards extremes, either too optimistic or too pessimistic. We underestimate how bad things can be in the short term, and how much better they can eventually turn out to be in the longer run. This leads to bad decisions, laughably wrong forecasts and predictions and a lot of confusion.

A reasonably optimistic person is a little cautious, a little cynical, and expects surprises, setbacks, bewilderment and disappointment.

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Optimism Bias

Too much optimism prevents us from accurately predicting and understanding the pain and struggle that is inevitable in the future.

What it does is it reduces our stress and anxiety and provides a ‘playground’ where we can imagine alternative realities which we need to believe in.

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Realistic Optimism

A realistically optimistic person knows that though things will happen, things that will be surprising, disappointing or completely out of control.

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Acceleration Due To Breakdown

The war-torn countries of the 1940s, Germany and Japan, quickly recovered and exceeded the expectations of the world, ranking much higher in development than many countries who had not experienced war.


Progress happens at an exponential rate when people learn new things, and when there is collective pain, suffering and misery, people learn a lot.

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SIMILAR ARTICLES & IDEAS:

Some downsides are unavoidable

Some downsides are unavoidable

Life is a little easier if you expect a certain chunk of it to go wrong no matter how hard you try.

Smart people screw up. Good people have bad days. Nice people lose their temper....

How we think about risk and opportunity

It’s impossible to think about risk and opportunity without a reference point. And ours is at most incomplete (if not totally wrong).

Everything we think about risk and opportunity is shaped by our own specific situation and personal experience. So everybody has a view of risk shaped by narrow experiences but applied to the broad world.

Long-term and short-term thinking

Long-term thinking is difficult to put in action because the long run is a collection of short runs that have to be handled, displayed, and used as information to gauge whether a long-term reward still exists.

Short-term thinking can be the only way you’ll survive long enough to experience long-term results.

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There are two kinds of historical events to learn from

There are two kinds of historical events to learn from
  • Specific events. Their usefulness is limited to particular events that will not be repeated in the exact same way. What did this person do right, or wrong? What ideas wo...

Calm plants the seeds of crazy

  • Good times often breed complacency and scepticism of warnings. Until 2020, the public assumed pandemics were things of the past. 100 years ago, people had a better understanding of how dangerous an outbreak could be.
  • Carl Jung thought that an excess of something gives rise to its opposite. When there are no recessions, people get confident. Confident people take risks, leading to recessions.

Progress requires optimism and pessimism to coexist

Optimism and pessimism go hand in hand. In finance, we are told to save like a pessimist and invest like an optimist. The short term is full of setbacks, problems, breakages, depressions, pandemics, errors, but if you can stick around long enough, you can experience long-term growth.

The long-run is usually rather good and the short run is normally quite bad. In reconciling the two, we learn how to manage both.

Permanent Assumptions

Permanent Assumptions

In this world of uncertainties, nothing but death and taxes are sureshot in our lives.

There are however some assumptions that withstand the test of time. These assumptions take in...

The World We Live In

  • People generally want to solve problems than to create harm, but those who want to harm get a lot more attention.

  • While people can be taken advantage of, it can’t be done for an infinite period of time.

  • Every ten years or so, there has to be some economic, political, military or social breakdown, according to historical data.

Human Behaviour

  • Stories are more engaging than statistics. A thousand people dead evokes different emotions than the death of that one person whose story we all know.
  • The only thing constant is change, and nothing good or bad stays that way, ever. However, one can never find out what or when the change would be.
  • Incentives can make people do good and bad things. While a group of people can be made smarter, they cannot be made more patient, less greedy during uncertain periods.