A Different Degree of Wealth

Overcoming Pessimism Bias In Investing


There’s no doubt about it: investing in times of volatility can be downright unsettling. It can seem that the market is in a continuing and constant free fall with no bottom in sight. Of course, what does not help are the doom and gloom headlines designed to create fear and a sort of panic regarding how these “times are different.”

The truth is that market volatility is a normal part of investing. Even though the market is unpredictable, the response from investors is often predictable. Investors are prone to focus on their negative feelings, on negative news, which results in a negative outlook.

In this post we’ll discuss how you can overcome your own pessimistic tendencies so that you can follow your financial plan and stay the course!

What is Pessimism Bias in Investing?

This general overall feeling of negativity when it comes to investing during these times of market volatility is called Pessimism Bias. This psychological bias is the tendency for investors to give more weight to negative information. It has been shown that investors tend to feel worse about the market after bad news–especially if they are constantly checking their investment statements and following market pundits.

The media’s tendency to report on market declines while claiming they know what will happen next creates biases that investors should learn to recognize and resist.

The pessimism bias underestimates the likelihood of positive events. The bias has been shown in numerous studies and can affect decision making; for example, by causing people to avoid taking action because they think that their actions will not lead to success. In other words, when faced with a choice between two options—one that we expect will make us happier or one that doesn’t—we often choose the first option even though it might not actually be better for us in the long term.

However, not all investors have this pessimistic bias and there are some advantages to being a “naysayer” when it comes to your portfolio.

Advantages of Pessimism

The pessimism bias has obvious advantages when it comes to avoiding mistakes. If someone is pessimistic, they’re less likely to make a foolish investment that might lead to financial loss or embarrassment. They’re also more likely to be cautious; this can help them avoid making bad decisions that could result in losing money. In other words, if someone is touting some hot stock or sector, a tad bit of pessimism maybe helpful in warding off an optimism bias so you are not loading up an investment that is inherently risky. The optimism bias can be problematic because it can cause people who suffer from it to make unwise investments and end up losing money as a result of their poor decision-making skills.

However, there are some disadvantages associated with being overly pessimistic as well: too much caution can lead investors away from potentially profitable opportunities and prevent them from taking advantage of market conditions when they arise.

The Drawbacks of Pessimism – Things to be aware of

Here are a few things to keep in mind regarding the pessimism bias.

The first is that people tend to over-estimate the probability of negative events. This can be a problem when it comes to investing because it causes people to worry about things that are unlikely to happen and not focus on more likely events. Yes, markets do go down but when viewed through a historical lens, the market is up over 70% of the time (1926-2022).

Secondly, investors tend to under-estimate the probability of positive events. Since many investors tend to overweigh bad news, they often fail to see the positive events of a down market–the chance to rebalance the portfolio and buy equities at a steep discount. One must only look back at 2020 to see the incredible impact of the market after its COVID CRASH in the spring. If an investor was sitting in fear on the sidelines, they missed out on incredible market returns.

Note to reader about the above chart: The US Total Stock Market had an annualized return of 11.96% from January 2011-August 2022. From January 2020 to March 2020 the Covid Pandemic saw the US Total Stock Market down close to 21% (20.89%). For illustration purposes only. You cannot invest directly in an index. Returns shown do not include any investment or transaction fees. Source:

Third, when something bad happens (or does not happen), pessimists find it more difficult to imagine any other outcome than what happened and thus fail to consider all possible outcomes. This can lead them to believe that a poor outcome was always inevitable, even when there were other possibilities.

Finally, people tend not to consider what’s most likely when they’re pessimistic – they focus on worst-case scenarios instead.

Overcoming the Pessimistic Bias

There are several things you can do to overcome the pessimistic bias:

Revisit your financial goals

There is no better time to look at your financial goals and see the big picture as it relates to your overall investing strategy. Looking out into the future is a healthy exercise–especially when you can look at past market returns in a historical hindsight. This exercise will remind you that even though it FEELS different, the reality is that we have been here many times before as it relates to market volatility.

Plus, investors who set goals and objectives are more likely to succeed in reaching their investment objectives than those who do not.

Have a plan

A well-thought-out financial plan is one of the best ways to mitigate the pessimistic bias because it provides a framework for making decisions under uncertain conditions, which are par for the course in investing! This is where a financial planner is critical since they not only create a commonsense plan but prepare you for all sorts of markets. Believe it or not, we have already taken market volatility into consideration and is already part of your overall investing plan and strategy.

Practice Mindfulness

Being mentally prepared for whatever comes your way is crucial when dealing with market volatility (or anything else life throws at you!). If you are not prepared to deal with the ups and downs of the market, it can be easy to fall into a negative mindset.

Being aware of this is key when it comes to building your mental strength and resilience so that you can practice mindfulness. Mindfulness is about being present in the moment, focusing on what’s happening around you rather than thinking of all the things that could go wrong or right.

If you are feeling queasy and uneasy about the market – talk to your advisor. They are a true source of wisdom and guidance in ANY market.

There’s too much at stake to let a pessimistic bias hinder your investing.

The pessimism bias has a way of tricking us into thinking that our bad luck will continue indefinitely, but research shows that the gap between our perception and reality is often quite wide. As an investor, it’s important to keep this in mind.

Whether you’re looking at today or the past century of market returns, there’s no evidence to suggest that this time is any different than others. Investing is a lifelong journey that requires discipline, focus, and an overall plan that considers a myriad of factors. The reality is that a diversification strategy based on academic sciences, coupled with a spending, and saving strategy is the key to financial and investment success.


The pessimistic bias is a natural tendency that can be overcome with time and practice. The key to overcoming it is developing an awareness of how you think about investing, so that you can take steps to change those thought patterns when necessary. This means being aware of your own personal biases and, if necessary, seeking our help to address them effectively.

Have a great weekend!

Source: Ballentine Capital Advisors

Golf Tip of the Week

Keep The Lead Hip Firm For A Solid Swing

For more power, avoid sliding toward target

One of the most prevalent issues that I see with my students is sliding the left, or lead hip (right-handed golfer) too far toward the target in the downswing.

Most of us, when we first started playing the game, were told to hit against a firm left side. When the left hip moves well past the left foot, there isn’t a whole lot of firmness. And, there isn’t a whole lot of rotation. And without rotation, power is dramatically reduced.

Here is an analogy that might help put you back on track:

Maybe you have a fenced-in back yard with a gate. If you don’t, humor me and just pretend that you do. If the post that the gate is attached to is straight up and down, the gate opens and closes perfectly. If the post is tilted, good luck with the gate. Same with your golf swing. At impact, if the left hip is over the left knee and left ankle, forming a straight vertical line, your right hip will rotate perfectly just like the gate. If the left hip slides past the left foot, rotation is diminished along with power and accuracy.

Here is a drill to help you get the hang of it:

Stand in a doorway with the outside of your left foot touching the door jam. Cross your arms across your chest. Make a backswing turn and then a through swing turn. During the latter allow your left hip to move laterally just enough to make contact with the jam. That amount will put you in a vertical left leg position, the perfect place for maximum lead hip rotation. And hip rotation translates to more power, which we all want.

Tip adapted from golftipsmag.comi

Recipe of the Week

Air Fryer Blooming Onion

2 servings


  • 1 (about 250g) large brown onion
  • 1 egg
  • 60ml (1/4 cup) milk
  • 50g (1/3 cup) plain flour
  • 1 tsp sweet paprika
  • 1 tsp garlic powder
  • 1 tsp onion powder
  • Sweet chili sauce, to serve
  • Sour cream, to serve
  • Chopped fresh chives, to serve


  • Cut the pointed top end from the onion. Peel. Place, cut side down on a board and make 10 cuts, from the top to about 1cm from the base. Gently loosen onion segments to make ‘petals’.
  • Whisk the egg and milk in a jug. Combine flour, paprika, garlic powder and onion powder in a small bowl. Place onion in a bowl and sift over some flour mixture, filling any gaps. Shake off excess and reserve. Drizzle egg mixture over the onion and into the gaps. Sprinkle with remaining flour mixture. Spray with olive oil. Cook in an air fryer at 350F, spraying with oil halfway through, for 15 minutes or until golden and crisp. Serve with sweet chili sauce, sour cream, and chives.

Recipe adapted from

Health Tip of the Week

If you are lucky enough to have a local farmers market, you have access to an enticing array of produce, fresh and in season ― and a lot more ― from local farmers, bakers, artisans, and vendors.

Melinda Cater, a dietitian at Johns Hopkins, helped start a farmers’ market in her own neighborhood in 2011. She has some delicious ideas about how shopping at your local farmers market can add nutrition to your meal planning and health to your family and community.

Are there nutritional benefits to shopping at farmers markets?

Definitely, says Cater. “Produce from local farmers has spent more time on the vine, on the tree or in the ground, so you get better taste and more nutrients,” she says. “When it comes to fresh fruit and vegetables, the shorter the time and distance from farm to sale, the higher the levels of vitamins and minerals.”

What are the best things to buy at a farmers’ market?

For the best taste and nutrition, experts agree that you can’t go wrong with fruits and vegetables in season.

If you don’t know what grows when, there are plenty of ways to find out. Cater says some vendors and even the markets themselves have email threads you can sign up for and social media sites you can consult before you visit the market to find out what foods are likely at their peak. “For instance, our local market has a produce calendar by month saying what’s likely to be available,” she notes.

“As you get in the habit of going to the farmers market regularly, talk to the farmers and sellers. They’re happy to share and will tell you what’s good that week and what they’re likely to bring next time,” she adds.

Cater points out that most farmers markets don’t have just fruit and vegetables. You can buy bread, eggs, pastries, meat, fish, homemade soups, olive oils and other goods. “The great thing about the markets is that the sellers are often the producers: They raise, grow, harvest, bake or prepare the products themselves.”

What foods should you avoid buying at farmers markets?

In general, use your senses to assess the quality and freshness of the food you’re buying at the farmers market,” Cater says. “Avoid produce with wet or slimy leaves and keep an eye out for produce that is changing color, such as green veggies that are turning yellow. Be on the lookout for mold and avoid produce that smells foul or bitter or that is abnormally soft.

“Especially during hot months, buy perishables such as meat, poultry, fish and eggs last and transport them in a separate bag from fresh fruits and veggies to help avoid cross-contamination,” Cater says. She recommends bringing an insulated bag or cooler to keep these items and dairy products cool until you can get them into the refrigerator, especially if you aren’t heading straight home.

“In terms of prepared foods, observe the vendors. They should be wearing gloves when handling foods and changing gloves when moving between raw and cooked foods. If you have any worry that foods are not being properly refrigerated or cooked, you’d do best to avoid them.”

Risky Foods

  • Raw sprouts such as raw mung bean, radish, alfalfa, or clover sprouts, can be risky in terms of food poisoning. They are typically grown in warm humid conditions, which can foster bacterial growth. Cater does not recommend buying raw sprouts at a farmers’ market since they might not be properly refrigerated during transport.
  • Raw milk and cheese should be avoided, even if your area permits the sale of these products. Cater says the Food and Drug Administration, the Centers for Disease Control and Prevention and the American Academy of Pediatrics all advise against consumption of raw milk as it may contain multiple pathogens that can cause vomiting, diarrhea, abdominal pain, and flu-like symptoms.

“Some people tout the health benefits of raw milk compared with pasteurized milk, but those claims are largely unsubstantiated and not worth the risk of getting sick,” Cater advises.

Storing and Freezing Fresh Fruit and Vegetables

You may leave the farmers market with a large amount of produce, and you don’t want good food to go bad. There are many ways to preserve produce, including freezing, drying, and canning. Learning some of these techniques can be a rewarding way to keep healthy vegetables on your table all year long.

Farmers markets that take place on Saturday or Sunday provide time for some food prep, Cater notes. “Spending a little time washing and preparing your fruits and vegetables over the weekend makes it easier to have them handy throughout the week when you’re busier.”

Cater says each type of produce is a little different in terms of how to handle it, and it makes sense to look up particulars for freezing and storing the items you buy. Here are some suggestions for common farmers market purchases.

  • Preparing leafy greens: Separate leaves from the head. Soak for 10 minutes in cold water, and swirl to remove dirt; dry in a salad spinner or pat each leaf with a clean towel. Keep greens separated from orchard fruits, bananas, avocadoes, and tomatoes, which emit ethylene, a natural compound that can make salad greens go bad more quickly.
  • Herbs and asparagus: Wash in cold water and spin and wrap in a damp (not wet) towel; refrigerate. For basil, trim the stem ends and put in water like you would flowers; do not refrigerate.
  • Keeping berries fresh: Rinse the berries and lightly dry on clean towels; store in the refrigerator in a slatted container or small strainer or colander so water does not collect in the bottom.
  • Melons: Wash the outsides, which can harbor germs that can get on your cutting board and other surfaces when you slice them.
  • Freezing vegetables: Trim stalks, remove seeds from peppers, and cut large vegetables into bite-sized pieces. Blanch to kill germs, brighten color and lock in nutrients. Freeze separated pieces on a baking sheet, and store in a vacuum-sealed freezer bag. Do not freeze tomatoes.
    • How to blanch: Cook in boiling water (about 1 gallon for every 2 cups of vegetables) for two or three minutes, drain, and place vegetables into a bowl of ice water.
  • Freezing fruits: Wash berries and sliced orchard fruits, but do not blanch them: Simply freeze on a baking sheet.

Farmers Markets: Growing Healthier Families and Communities

More and more markets are popping up in urban, suburban and rural areas alike, providing access to fresh, local foods and helping to inspire healthier lifestyles.

Visiting your local farmers market can be a fun and healthy family outing. Cater says bringing kids with you to the farmers market is a great practice. “Letting children select produce, meet working food providers and try new fruits and vegetables can help them feel involved in meal planning and inspire healthier eating habits.”

Just as individuals and families can benefit from the presence of farmers markets, so can entire neighborhoods. For instance, farmers markets help communities that otherwise may not have abundant access to fresh fruit and vegetables.

“Neighbors of all ages and backgrounds can gather, try new things, learn about healthy foods, where they come from and how to prepare them,” Cater says.

Tip adapted from hopkinsmedicine.orgiii

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Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.

Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.

This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.

No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.

Advisory services through Ballentine Capital Advisors, Inc.


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