Company Updates & Weekly Activity (May 8th-12th)

Seduction of Pessimism, Company Updates, & Weekly Activity

The Seduction of Pessimism in Financial Markets

This past week wasn’t anything special for the market; although, its been like this for the last 3 months (performance-wise). I’ll tell you what has been entertaining though, MSM/reputable investors/major influencers using their platform to spread fear into your average investors mind. No matter what you do, you will NOT escape this pessimism in unprecedented times. Its been like this since man walked the earth. Pessimism attracts, while optimism is ignored and overlooked. Morgan Housel, the author of a phenomenal book called The Psychology of Money, said it best about pessimism:

“It’s intellectually captivating, and it’s paid more attention than optimism, which is often as being oblivious to risk.”

Pessimism is seductive because it provides an illusion of control. While optimism is often associated with success, pessimism “can” be just as effective at achieving success, but in a different way. It allows people to identify and plan for potential problems, and to take steps to mitigate them before they occur. This can help to avoid costly mistakes and minimize risks. People who have experienced difficult times, whether financial or not related financially, may become pessimistic as a way to guard against future disappointment. While this ultimately can be a rational response in the short-term, over time it can become destructive and prevent people from taking advantage of opportunities that come their way. I believe we saw this in all of 2022 and we are seeing it again in 2023.

Now, I’m not saying it’s not rational to prepare or protect yourself from catastrophic events… it’s important to maintain a balance between pessimism and optimism. But…when the pendulum is unbalanced to one side, you become blinded from what’s on the other side. What I’m trying to say is that too much pessimism can lead to a narrow focus on risks and missed opportunities, and this has been widely spread throughout financial markets today and since they’ve ever even existed.

It’s fine to be pessimistic about the U.S. economy or even apocalyptic (your choice), but none of this should consume long-term investors with a 20-year investment horizon. History/data/facts have all proved this point, I would refer to my pinned publication for more detail. My advice to avoid becoming a victim to this costly narrative, is to tune out the noise. That means stop watching MSM & following the “doom porn” on social platforms. This stuff will find you regardless, even if you are unplugged from society, it always finds a way. Just look at how the narratives in financial markets are at an extreme level… our banking crisis, debt ceiling, our US dollar, “inevitable recession”, “greatest asset bubble to ever exist”, etc. Take a step back and analyze how extreme these narratives are, they are all REAL concerns but the way it’s being introduced and pushed into society is questionable.

By no means am I telling you to “bet the farm” or insinuating to go “fully invested” so you become a victim to one of the narratives above actually coming to fruition; although, I would argue, even if you were fully invested into quality funds and businesses and this happened, the declines across the board should be looked at as an opportunity to accumulate (assuming you’re a LT investor). I’m essentially telling you to be selective on the information you’re consuming on a daily/weekly basis, most of this is a distraction so you stay on the sidelines while people are being greedy when everyone’s fearful. Its been like this throughout entire market history (please don’t make me pull up Jeremy Siegel graphs & the “smart-sounding reasons to sell” chart), nothing has changed. I understand everyone has different time-horizons, financial plans/goals, and investment strategies. So, you have to do what fits and aligns best for you and your family. Just keep a level head, filter the information you consume, and maintain a long-term mindset.

Company Updates & Weekly Activity (May 8th-12th)

1. Relay Therapeutics (RLAY)