“Bearish is Easier than Bullish”

No matter what is happening in the markets or wider economy it seems you can always make a case for why the market is about to crash or why we are set for another bull run.  10 different advisors or economic “experts” can view the same circumstances but come up with 10 different expected outcomes.  However, during my time as an advisor it seems that it’s almost more attractive and intriguing to be “bearish” (AKA thinking the markets will fall and being pessimistic) than it is to be “bullish”.  Individuals inherently become more intrigued by an idea that says we should reduce risk, protect capital, and be ready to deploy cash when prices are lower.  Perhaps because people want to believe that an “expert” should know more than they do and therefore doing something feels better than staying the course. Optimism in the face of uncertainty just looks naïve and too simple for many.

What I have come to realize (certainly only my opinion based on observation) is that being “bearish” is a mindset.  Usually a “bearish” outlook is not a reasoned conclusion that someone makes after thorough analysis but rather it is a philosophy that goes looking for evidence to support it’s thesis.  Said more simply…some people are permanently in a state of mind that assumes doom and gloom is around the corner.  They then go look for all the evidence that supports their thinking.

Alternatively, having a bullish and optimistic outlook in the face of news and economic headlines that are typically “negative” takes courage.  Some may call it naivete but being optimistic about markets in 2009 or in the early months of 2020 took a lot of courage and no doubt will take courage again in 2024 and beyond.  That isn’t to say that markets will ALWAYS be positive but having a long term optimistic outlook on things is complemented by market returns over the long-term.

So, the next time you are inclined to agree with a bearish sentiment ask yourself whether you were simply looking for confirming evidence of your philosophy or whether you came to your conclusion based on deep analysis and historical facts.  Happy investing!

Disclosure: These are the opinions of Tony Van Gelder and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.