Imagine taking your driver’s license test, knowing you’re well-prepared but consumed with the fear that you’ll fail. How would that impact your performance? Would you find yourself overcompensating during the drive, acting when you shouldn’t or hesitating when you needed to act?
Ultimately, your fear could lead to failure, even though you were prepared to succeed.
This is an example of pessimism bias — the tendency to overestimate the likelihood of a negative outcome while underestimating the probability of a positive one. (Closely related is negative bias , our tendency to give more attention and weight to negative information or experiences than to positive ones.) Pessimism bias can lead us to make overly cautious and inhibitive choices due to fear of loss or failure, and miss opportunities for good things.
Pessimism bias is unbecoming for us as Christians. The Psalmist reminds us:
The Lord is my light and my salvation — whom should I fear? The Lord is the stronghold of my life — whom should I dread? Psalm 27:1 (CSB)
Scripture directs us to focus our minds on good things and place our worries and anxieties in the hands of our Lord (Philippians 4:6-8).
Unfortunately, pessimism bias can impact many areas of our lives, including our finances and investments.
For example, pessimism bias could lead you to develop an overly conservative investment portfolio, which may result in insufficient growth to reach your financial goals.
It could also lead you to attempt to time the market by selling in anticipation of a downturn and buying back in only when you feel confident of market conditions. This mistake often erodes your returns because you may miss out on periods of significant market gains.
Here are six encouraging tips for addressing and combating pessimism bias to help you stay on track with your investment plan.
Everyone has a measure of risk aversion, or the tendency to prefer certainty over uncertainty, even when the uncertain option might lead to a better outcome. Pessimism bias can fuel risk aversion by making a person overestimate the likelihood or severity of a negative outcome. When someone is pessimistically biased, they may perceive risks as more threatening than they actually are, leading them to avoid those risks altogether. However, the writer of Ecclesiastes tells us that taking risks in life is necessary.
One who watches the wind will not sow, and the one who looks at the clouds will not reap.
Ecclesiastes 11:4 (CSB)
All investing in life, whether personal, spiritual or financial, involves a measure of risk. Taking on risk means accepting periods of discomfort. But worrying too much about what may happen can keep us from reaping the benefits. The key is to be wise about the risks that you take.
Remember, the market can fluctuate wildly from day to day or week to week based on short-term factors such as economic data releases, global and geopolitical events, and even investor sentiment driven by news and rumors. However, your financial plan is based on long-term factors such as your retirement income goals and investment time horizon.
While past performance does not guarantee future results, the stock market has proven resilient over the years. When evaluated over long periods, the market has been friendly to investors, yielding far more positive returns than negative ones. Keeping the long-term in mind can help you overcome pessimism bias.
Remember the words of Jesus:
“Can any of you add one moment to his life span by worrying?”
Matthew 6:27 (CSB)
Watching your account balance fluctuate during times of volatility will only increase your pessimism and worry. You’ll find yourself second-guessing if you should pull out of the market (during downtimes) or put more in (during uptimes).
This can lead to emotional investment decisions such as panic selling or impulsive buying, which can be detrimental to your long-term investment plan. Instead, schedule regular reviews of your account with your advisor.
We live in a 24/7 news cycle, and media companies know that urgency and sensationalism draw viewers and clicks. The pessimistic investor may allow widely reported events to have an oversized impact on their investment perspective. Don’t allow dramatic headlines to drive you into making an impulsive investment decision. Maintain a critical perspective on headlines and news stories.
Base your investment decisions on sound financial practices and the fundamentals of investing. The value of your portfolio is ultimately based on the quality of its investments and diversification strategy — not on sensational headlines.
In all things in life, consistency matters, and it’s the same with your investments. Most investment and retirement plans offer investment options that allow contributions to be made directly from your bank account or deducted automatically from your paycheck. If you do not already use this option, your advisor can help you get started.
Your advisor can also set you up on a rebalancing plan. Regular rebalancing helps ensure that you buy low and sell high based on the value of your investments — not on market noise.
Using these options takes investment decisions out of your hands and overrides any hesitancy or impulsiveness caused by pessimism bias.
An advisor understands you and the market and can bring objectivity to your situation. They can also act as a trusted accountability coach to help you stick to your plan, especially during times of turmoil.
At GuideStone®, we’re committed to helping every servant of Christ finish well. GuideStone Advisors® has the values, expertise and tools to help you align your finances with your faith, maximizing your impact on his Kingdom.
Book an appointment to talk to an advisor today!
Advisory services offered through GuideStone Advisors®, an SEC Registered Investment Adviser. GuideStone Advisors is a controlled affiliate of GuideStone Financial Resources®. For more information about the firm, products and services, please review the GuideStone Affiliate Form CRS.
Advisory services offered through GuideStone Advisors®, a SEC Registered Investment Adviser. GuideStone Advisors is a controlled affiliate of GuideStone Financial Resources. For more information about the firm, products and services, please review the GuideStone Affiliate Form CRS.
Article
• Nov 11, 2025 