Why negative thinking is good for you

A few minuses can add up to a big plus

Posted Jul 08, 2010

Part 2 of Becoming a visionary in five easy steps

She accurately foresaw the destruction of her city, the death of the man who caused that destruction and, ultimately, her own murder. But despite a perfect record predicting the future, no one ever believed her. She was a woman of surpassing beauty, whose very name meant "entangler of men," but she had entangled the wrong man.

According to Greek mythology, Cassandra, a princess of Troy, had mislead Apollo into thinking that she'd give more than worship at his temple. So Apollo punished her by simultaneously granting her the gift of prophesy and the curse of never being believed.

Anyone who‘s tried to tell a coworker that their drinking would get them fired, to caution a friend that that their girlfriend would dump them, or to warn a teenager about, well, anything, knows how Cassandra must have felt. People just don't want to hear gloomy forecasts.

Psychologists have different theories about why we ignore bad news. Freud believed that we unconsciously tune out information (such as we're drug addicts or poor judges of character) that threaten our egos. Another idea is that we'd rather feel good than bad, and that disbelieving bad news simply makes us happier. My own belief is that we have to work hard work to prevent looming disasters, so our instinct to conserve energy (so we won't starve to death) leads us down the path of least resistance (or into that river psychotherapists call "de-nial").

But it doesn't matter why we ignore bad news, the fact is that most of us do, and this creates big opportunities for the rare people who don't.

The most salient example of someone who prospered by accepting the possibility of disaster was a pig. We don't know his name, only that he was a diminutive pig living near two other small porcines who built their houses from sticks and straws respectively. When the neighborhood wolf came calling, the predator was able to blow down the flimsy straw and stick houses and eat their short-sighted occupants. But our nameless pig, who'd built his house of brick because he believed that bad things could happen, survived the encounter with the wolf to go on, so we are lead to believe, to live a long and happy piggy life.

Embracing bad news has paid off handsomely for real-world characters as well. In the mid 90's, when Bill Gates saw that the Web would probably become a "Killer App" that would rival Microsoft Windows and Office, instead of fighting the Internet, he incorporated it into virtually all of his company's software (e.g. hyperlinks in Office documents) and, as a result was able to keep Microsoft growing at a healthy pace.

Ford motor company restructured their debt a couple years before the recent economic meltdown, helping them avoid the bankruptcies that plagued GM and Chrysler, and to turn down a bailout offer from the Government. As a result, Ford prospered during the recovery and gained in worldwide market share.

Prior to the same economic meltdown that Ford survived, hedge fund manager John Paulson thought it was likely that the housing bubble (artificially high housing prices) would collapse, so he directed his company to "short" mortgage-backed securities ( Paulson and Company contracted to sell securities at a future date at current market prices while buying those same securities in the future at much lower prices). Paulson's vision was accurate and his company reaped huge profits when the mortgage market collapsed.

The Paulson case illustrates two important points about what it takes to be a visionary: First, if you allow yourself to think the unthinkable, you'll probably find big opportunities that others miss, precisely because others don't want to think the thoughts you're thinking.

The second attribute you must have as a visionary is thick skin. Before the fact, your prognostications of doom will elicit skepticism and scorn; after the fact they'll probably bring out jealousy ,even rage that you profited from others' misfortune (Paulson is not a popular guy right now).

If you're brave enough to handle the downside of thriving while others suffer, there's a simple way to reap big rewards by assuming bad things will happen. Just ask yourself what you don't want to happen at work or in your personal life, then imagine how you might make the most of a bad situation. For example, if you really, really, really don't want a rival company to buy your firm, assume for a moment that the feared event is going to happen, then jot down a few ways you might actually come out on top when it happens. Perhaps you could arrange to meet key executives of the rival company at a tradeshow, so that' they'll know you and respect you when the takeover happens (even if they fire most of your co-workers, your company's new owners will need to keep a few people around to tell them how things work in their new acquisition). You could also buy up some of your own company's stock --or "short" the rival companies stock--knowing that the stock price of a company being taken over usually goes up while that of the taking over company plummets.

I took an approach similar when I bought some gold right before....Oooops: think I'll stop here because I just re-read the opening of this blog about what ultimately happened to Cassandra!

Learn more about what it takes to be a visionary, and test your VQ©TM (Visionary Quotient) at http://www.longfusebigbang.com

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