The headlines have never sounded scarier, and the market keeps setting records, which is exactly why investor optimism wins over a full cycle, and why your own behavior is the real risk.

Hope is not an investment strategy. Every advisor has said some version of that line, and it holds up. You cannot pray for a higher portfolio. Ben Carlson made the sharper point in a previous piece that while “hope is not a strategy, investor optimism absolutely is.^1″ I will take it a step further. Understanding why investor optimism wins over a full market cycle is one of the most underrated edges an investor can own, and it has almost nothing to do with waving pom-poms.

Look at the “wall of worry” investors…