2012-07-17

What, Me Worry?

I once knew a man - let's call him Dennis - who had heavily invested himself in a particular company's stocks. Unfortunately, that company experienced a major decrease in value, and its stock price plummeted. Question: What did Dennis do next?

Answer: He invested even more heavily in the same stock.

Now, Dennis was not in love with the company in question nor its stock. He was not chasing fools' gold. There was an underlying purpose here. As many stock traders know, when a stock loses value, it often "rebounds" at a slightly higher price shortly thereafter. Dennis understood this. He bought more of the losing stock so that he could sell it quickly and lock in a small amount of profit.

In fact, Dennis did this several times with the same stock over the next two years, and ended up making a substantial amount of money when it was all said and done.

What You Should Learn From Dennis
When the going gets tough, pessimists lament their bad luck, sell their stocks, lock in a huge loss, and go cry about how nothing ever works out for them.

When the going gets tough, optimists think to themselves, "How can I use this to my advantage?"

This is big. This is much more than merely seeking a silver lining on a cloud. This is reinventing a bad situation, transforming it into a good one. This is not just "making the best" of things, it is "making something good." This new, good thing would never have existed had it not been for the bad thing.

So, I rather than looking for the silver lining on a cloud, make lemonade out of lemons. If something is sour and unpleasant, sweeten it and turn it into a delicacy.

I Know - Easier Said Than Done, Right?
A practiced pessimist will quickly retort that this is easier said than done; but at what point did anyone claim this was easy? The question is not whether or not it is "easy" to profit from a bad situation. The question is simply, what other choice do you have?

Think about that. You can roll over and die, or you can come out on top. If you've already lost, what difference does it make if you lose again? The one great advantage bestowed upon a loser is that he or she no longer has anything left to lose. The marginal cost of additional failure is zero. The marginal benefit of trying again is very high.

So, to sum up, here are a few important attributes that optimists have, which serve them well in times of trouble:
  • An unwillingness to simply lose
  • A belief that success actually is possible
  • An attendant narrative associated with that potential success
  • A desire to use the conditions of a particular failure as the springboard for subsequent success
These things don't happen naturally. They are skills honed with practice. Are you practicing your optimism?