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When Too Much Optimism Is Bad; Learning to Expect the Worst; Stockdale Paradox

A woman in a yellow hat and a black coat crosses her fingers for luck and remains optimistic despite expecting the worst.

Almost everyone I meet lately in both the mortgage and real estate industries is riding an unprecedented wave of success.

They invariably have unbridled optimism that is often coupled with very ambitious plans for growth.

JVM of course is no exception to this – but we are also planning for the worst.

This is b/c Heejin and I have read dozens of books that illuminate how important this exercise is for both mental health and business survival.

These books include The Hard Thing About Hard Things, Good to Great, and Ryan Holiday’s excellent book – The Obstacle Is the Way.

All of the authors make it clear that successful leaders need to not only prepare for the worst but to even expect it. 

Leaders who don’t, not only often lose their businesses but they suffer severe mental depression as well.

The best example is the Stockdale Paradox, explained in this short essay, and featured in numerous books including Good to Great and The Obstacle Is the Way.

STOCKDALE PARADOX

Admiral Stockdale was imprisoned in Vietnam for 7 years as the highest ranking American military officer; he was tortured repeatedly, put in solitary confinement for four years, and forced to wear leg irons for two years.

Despite all that, he never lost faith that he would someday get out.  BUT, he also never stopped bluntly facing the stark reality he had to endure – without getting irrationally optimistic – and that is the paradox.

In contrast, Stockdale tells stories about the optimists who convinced themselves they’d be out by Christmas or a certain date – only to end up literally dying of a broken heart when they did not get out.

LEARNING TO FACE STARK REALITIES

It was not the optimists who did the best by any means, and it was not the pessimists either; it was the stoics who faced and accepted reality who did the best.  

In Ryan Holiday’s The Obstacle Is the Way, he talks about other leaders who succeeded precisely b/c they had that skill.

He discusses George Washington and Ulysses S. Grant in particular, as they endured overwhelming military setbacks and backstabbings that would crush most mortals.

But they excelled in spite of these obstacles and probably even b/c of them, simply b/c they were so willing to face stark realities head on. 

Inventor Thomas Edison is another example, as he watched his entire research factory burn to the ground, he endured countless failures and he even went deaf – without ever seeming to miss a beat.

And lastly, in The Hard Thing About Hard Things, author Ben Horowitz talks about the necessity of learning to be a “wartime CEO” in order to navigate hard times.

Leaders who don’t learn this skill or who don’t replace themselves during hard times usually go down with their ships.

SO… this is a friendly reminder to remember that not only will the good times come to a screeching halt at some point, but that things will also get markedly worse.

The key, according to the authors cited above, is to expect and even visualize the worst and come up with a plan now, while times are good, to deal with it.

100% optimism is most definitely not the way. 

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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