Optimists and Pessimists

[Lone Wolf]

I find that any portfolio that has a substantial gold allocation is called a bearish or "pessimistic" portfolio.  The PP is no exception and is often talked about as if it were some kind of survivalist's portfolio of canned goods and body armor.

It's funny to hear this because I happen to be a big optimist in general.  I believe that the world has become a better, brighter place over time and that it will get much better still.  The bounties of capitalism, freedom, and the information age make me giddy.  And I think that the world of my old age is going to be an incredible place.

Before I float away on a cloud of fairy dust and unicorn farts, I must say this: history shows that none of this is a smooth ride.  Kingdoms rise and fall, promises are broken, and sometimes millions are crushed in the avalanche.

I think that the Permanent Portfolio allows me to enjoy a most excellent world while smoothing out at least a few of life's inevitable potholes.  I don't think the world's going to end.  But it's guaranteed to surprise the hell out of me, one way or the other.  It's easier to be an optimist when you feel prepared.

How about the other folks here?  Do you consider yourselves optimists, pessimists, or something in the middle?

[Brad243480]

That is a great post, and I know exactly what you mean.  An old financial advisor of mine, every time I would ask him about gold he would say, "Do you really think the world is going to end?"  As if that was the only reason to have any allocation in gold.  Of course, now that gold has been rising and many other folks have been asking him about gold, he is starting to put people in small gold allocations (a sign gold may be overvalued? ).

Anyway, I consider myself more of a pessimist when it comes to certain things like politics, but I'm still an optimist about the future of the world.  Our number one health epidemic in the US right now is obesity.  When has it ever been the case that our biggest health problem was caused by having too MUCH food to eat?  So yes, the productive forces of capitalism are reason to be optimistic indeed.

But you nailed it on the head, no matter what happens in the world, the only thing that is guaranteed is that it will be in some way surprising.  That is why the PP is so attractive, and why it performs so well.

[MediumTex]

Craig and I talked about this very issue in his third PP podcast.

Check it out.  I would love to hear some feedback.

[Lone Wolf]

Anyway, I consider myself more of a pessimist when it comes to certain things like politics, but I'm still an optimist about the future of the world.  Our number one health epidemic in the US right now is obesity.  When has it ever been the case that our biggest health problem was caused by having too MUCH food to eat?  So yes, the productive forces of capitalism are reason to be optimistic indeed.

It really is incredible, isn't it?  It was interesting to read craigr's accounts of his time at the survival school.  Mother Nature's bounty isn't such an easy thing to gather up in one place all by yourself.  Primitive man was scrounging for every last lousy KCal whereas I am only limited by my imagination and how many bacon burgers I can shove down my fat pie-hole.

Your relative pessimism about politics may be warranted -- if there's one thing that can negate everything we have to be optimistic about, it is political stupidity.  The millions of people destroyed in "The Great Leap Forward" are (historically speaking) relatively fresh in the ground.

Craig and I talked about this very issue in his third PP podcast.

Just caught it last night and really enjoyed it!  I'll post up some thoughts in the main thread.

[craigr]

Before I float away on a cloud of fairy dust and unicorn farts, I must say this: history shows that none of this is a smooth ride.  Kingdoms rise and fall, promises are broken, and sometimes millions are crushed in the avalanche.

I think this sums up my views. I am not an optimist or a pessimist. I'm a realist. I don't own fire insurance because I want my home to burn to the ground. I own it just in case it does.

But at the same time I think it's a good thing to take advantage of the prosperity and technology we've created as well (for instance by owning stocks).

[Pkg Man]

I've always thought it better to be a pessimist.  If things turn out the way you expect you have the satisfaction of being right, and if not, you are pleasantly surprised.