Knowledge Hub

The Case for Rational Optimism

David Andrew
David Andrew
Posted 28.05.2020 in Lifestyle
We will be confident one day and fearful the next. As humans we are wired to look for danger and react quickly to a threat, so as the health and economic situation unfolds, we will all have our moments in the sun…and the shadows.

With life and businesses beginning to return to some sense of normality in Australia it is easy to be blind to the risks we all still face as a global society. As we begin to travel again, visit our local cafes and socialise with family and friends, we feel good about the progress we have made, however there is a case to be made for rational optimism.

Then again, it only takes a brief glimpse of the evening news to see the terrible impact of the Coronavirus in other places – the US, Brazil, UK and the developing world. And that’s before we consider the economic and broader social impact.

Surely a looming trade war with China should be cause for concern too. Who in their right mind wouldn’t want to get to the bottom of how Covid-19 started?  Then there’s the share market. This week alone, from Monday to noon on Thursday1 the share market is up 6.77 per cent. So far for the month of May the S&P/ASX200 is up 9.77 percent – a breathtaking performance when set against the news of the day.

Making sense of the current environment really is tough, and in our conversations with clients we get to chat with the optimists and the pessimists. There’s no doubt Australia has dodged a Corona-bullet. Swift action from government – federal and state – and community compliance, (well done you…and you!) have left us in a better position than almost anywhere else in the world. And yet, we are still at the beginning of this journey.

In the months ahead there will be good and bad news coming thick and fast, and this will impact our sense of well being and security – personally and financially.

This is where the concept of rational optimism comes in. My friend Alex Hof is a clinical psychologist. She tells me that being happy all the time is a fantasy – indeed she says the singular pursuit of happiness is dangerous and leaves many people hollow and searching for more.

Rational optimism is a wholesome concept.  It accepts that the world is imperfect, that we will have our triumphs and our sorrows. We will be confident one day and fearful the next. As humans we are wired to look for danger and react quickly to a threat, so as the health and economic situation unfolds, we will all have our moments in the sun…and the shadows.

Our society will pay a price for our shutdown. We made a rational choice to save lives at the cost of the economy – some have argued this was wrong. And yet what has now become very clear is that that the cities where Covid-19 is rampant must shut down anyway. They wear the full economic brunt of an even deeper shutdown and the horror of losing their loved ones. It’s the double-whammy no one wants.

The months ahead will require lots of rational optimism. We need to look forward with an expectation that things will be uncertain, but they will get better. For our part, every member of the Capital partners team wants to contribute to your rational optimism. It is a privilege to serve you in these challenging times and we want to help in any way we can.

Until next time, stay rationally optimistic!

Other reads:
The Conversation: The costs of shutdown are overestimated.
Dialling down the anxiety
Learned optimism

1 S&P/ASX200 – 25th May 2020 to noon AEST 28th May, 2020. 
David Andrew
David Andrew
David Andrew
Founder and CEO of Capital Partners, and author of Wealth with Purpose, David firmly believes that sound, objective financial advice can transform peoples’ lives and wellbeing. Find out more about how our evidence-based approach to wealth planning, investment management, legacy planning and insurance distinguishes our award-winning team, our results and our clients’ lives.