If your investments are good only because of future optimism, you will have surprises in the downside case. If your investments are good without optimism required then you will be surprised in the upside case.
One way to avoid being surprised by the downside case is to avoid losers rather than pick winners. However, it might be just as important to protect against the downside by enjoying every bit of the upside.
From Howard Marks at Oaktree.
See also:
- Venture capital is different, you can only lose 1x your money but missing out on fund-returning gains is the real loss
- Startup investing is investing in options
- Consensus macro forecasts provide no value
- Investment strategies that only work in a bull market
- Skepticism and optimism in markets
- Zero interest rate policy (ZIRP)