To be a good investor, we must be passionate about where we spend our time. Otherwise, the ups and downs of the job would eventually wear us down.

To be passionate about something, we must be optimistic that where we spend our time matters and that our research will lead to an outcome worthy of our effort.

That’s the optimism paradox. Because we’ve chosen to spend our finite time on a particular topic, anchored our career to it, and researched it heavily, it must be a good return on time and money. Otherwise, we wouldn’t have chosen it. Its success validates our decisions and, in some ways, our identities.

The optimism is required to propel us forward on the toughest of days. But, it’s also the trap we’ll fall into even on our best days.

I find myself searching for this equilibrium almost every day, especially lately. The negative headlines around the energy transition “slowing down” pile up in my inbox, but the data tells a different story. Is that my optimism, or do I understand a secret?

It’s a struggle to balance the healthy skepticism these headlines spark and the ground truth as portfolio companies grow into scaled assets with high-quality revenues.

This paradox applies to more than the energy transition and climate. All “movements” require passionate individuals to create momentum. Computers started with the Homebrew Computer Club. Crypto started with Satoshi and the first adopters of Bitcoin. All of them believed in the ultimate success of their hobby because they attached their identity to it.

The result is a constant push and pull between optimism and sufficient pessimism. Are we deaf to signals because of our desire to feel validated in our research? Or did our research unveil a secret that others can’t yet see?

The goal is always somewhere in between. Optimistic enough to make money and pessimistic enough to avoid unnecessary risks caused by a sunk cost fallacy driven by identity.