Optimism Vs Cautiously Optimism

These two words very often used in finance articles, particularly to describe investor’s thoughts about current market condition. I confuse with these and which context or situation we need to use these or follow these. In my mind, cautiously optimism was as equal to pessimism, which is totally unacceptable by capitalist’s thoughts. Capitalist and investors should not be pessimist, if they are then the whole progressive growth and world’s economy will melt like iceberg in artic.

But later on I realized that these two are equally same meaning but the main differentiator is time to take a decision. If an investor is “cautiously optimist” means they are not willing to take any decision soon, such as invest on one company’s stock, they are analyzing the situation very carefully and closely, exploring various options etc. Where optimism means we tend to take decision on the feet, we think that this is the right time to invest, don’t delay, go for it and seize the opportunity.

It is very hard to change the context between optimism and cautiously optimism in terms of thinking. It is all depends on how our “decision making skills” shaped up during the course of our life time. One of the hardest thing is our life is decision making, when to make decision, how to make, can I make decision based on my instinct or need an experienced people’s advice etc.

In business scenario, making decision is really tough. For example, latest fall of Wachovia and Bear Sterns. Both of these companies were very optimistic about sub prime market, they didn’t exercise cautiously optimism rather they want to make decisions on the feet. What happened now? The later made JP Morgan Chase rich by giving Manhattan skyscraper/ and their employees, clients for almost free.

Here is one good article about decision making http://edis.ifas.ufl.edu/he691. What I’m thinking about decision making are,
  • We should not jump into conclusion based on newspaper articles, news clips and videos. Sometimes media’s would influence or test our decision making abilities.
  • No decision is a bad decision – take a decision and move on whenever required.
  • Family value and their inputs are the most influential factor of making decisions – I would say 90% of our decisions based on what is good for our family.
  • Once you made a decision, stick with it - if it is reversible (in my mind, other than career decisions all are reversible) do it quickly, if not, continue with that, until you feel happy about it or search for happiness from it.

Comments

sukumar said…
Insightful post Subba. I wrote this post a while ago on optimism
http://www.sastwingees.org/2007/08/24/optimistic-or-pessimistic-which-is-better/

I think optimism in general yields better results. When you make decisions that affect other people cautious optimism maybe a better strategy.
10:21 PM
Subba Muthurangan said…
Thanks Sukumar. I have to go thru the post one more time.
11:08 PM
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