29 Jul 2026 The Best Is Still Ahead, The Worst Is Still Nearby
About a year ago, I wrote a Friday Brief called The Best Ahead, The Worst Nearby. It was inspired by Morgan Housel’s observation that successful investors have to believe two things at the same time: that the long-term future is likely to be better than today, while accepting that the short term could be difficult. In that Brief, I offered some practical thoughts on what it looks like to invest when the best may lie ahead, yet the worst could be just around the corner.
The more I’ve thought about that idea, the more it reminds me of the Stockdale Paradox.
The Stockdale Paradox comes from Jim Collins’ book Good to Great. While researching the book, Collins interviewed Admiral James Stockdale, the highest-ranking U.S. military officer held as a prisoner of war in Vietnam. Stockdale spent more than seven years in the infamous “Hanoi Hilton.” He was tortured repeatedly, isolated from his family, and never knew if or when he would be released.
Collins asked him a simple question: “Who didn’t make it out?”
“The optimists,” Stockdale replied.
The answer caught Collins completely off guard.
“The optimists?” he asked.
“Oh, yes,” Stockdale said. “They were the ones who said, ‘We’ll be out by Christmas.’ And Christmas would come and go. Then they’d say, ‘We’ll be out by Easter.’ Easter would come and go. Then Thanksgiving. Then Christmas again. They died of a broken heart.”
Stockdale wasn’t saying optimism is dangerous. He was saying false optimism is dangerous. He never lost faith that he would survive and eventually make it home, but he also refused to deny the brutal reality of his circumstances. Collins later called this the Stockdale Paradox: confront the brutal facts of your current reality while never losing faith that you’ll prevail in the end.
To be clear, I’m not comparing the challenges of investing to being held as a prisoner of war. But successful investing is hard. To stay invested, we have to genuinely believe the future will be better than the present. We have to believe people will continue to innovate, businesses will continue to solve problems, and the economy will continue to grow over long periods of time. That’s why we invest in the first place.
But that optimism doesn’t require us to ignore reality. Reality says markets fall. Sometimes they fall a little. Sometimes they fall a lot. There will be recessions, inflation scares, geopolitical conflicts, elections, financial crises, and headlines that make it feel like this time really is different. Every one of those events will tempt investors to abandon their plan. That’s not pessimism. It’s realism. And paradoxically, it’s that realism that allows our optimism to endure.
That’s why financial planning isn’t about predicting what’s next. It’s about preparing for what inevitably comes next. A good financial plan assumes there will be difficult years. It assumes your portfolio will decline from time to time. It assumes life will throw you a few surprises. In other words, a good financial plan embraces the Stockdale Paradox. It acknowledges that setbacks are inevitable while maintaining confidence that patience and discipline will ultimately be rewarded.
At Beacon, we don’t know what the market will do next month or next year. No one does. But we do believe that thoughtful planning, sensible investing, and disciplined decision-making give you the best chance of reaching your goals.
That’s not blind optimism. It’s confidence built on preparation.
Have a great weekend!
