Go long.

There’s always someone at every dinner who loves to explain why things won't work. It’s been me before, plenty of times. That one startup will run out of money. The city (whichever one they’re in) is finished. Machines are coming for everyone's job and we’re all screwed. And of course, who cares, the country is in decline anyway. These people are usually pretty smart and they're sometimes right about the next six months. They sound like the most serious people in the room.

In markets, betting against something is called being short and it’s expensive. You pay a fee every day−$0.00 to borrow what you're betting against, and if you're early you can lose more than you started with. It’s free to make that same bet in a conversation. You can be short a friend's company, a city, a technology or an entire country for years without ever paying a cent. It explains a lot about the mood of the last decade. Pessimism $0.00 has always been underpriced and people have bought it by the truckload. When all else is expensive, cynicism ¢ is reliably dirt cheap.

To be long is to own a piece of something and to want it to get better. There’s a major requirement though. You have to commit before you can know.

David Hume pointed this out almost three hundred years ago. Literally nothing in the past strictly proves anything about the future. The sun has risen every morning anyone can remember (which is excellent evidence) and it’s still not proof that it rises tomorrow. Usually, that’s a puzzle for a philosopher, but when you're deciding whether to back a company, hire a person, move to a city or marry someone, it becomes your actual situation. Every serious commitment is made on the wrong side of the evidence. It's usually too late to be early when proof arrives.

Over the last century, people who owned American companies earned several percentage points a year more than people who lent to them. While lenders get a contract and a relatively known return, owners get a share of whatever happens. The extra return (called the equity premium) is pretty much what the world pays people for agreeing not to know.

Two economists, Rajnish Mehra and Edward Prescott, showed that the premium was much bigger than standard models of risk could explain, and economists have argued about why ever since. (I'm not qualified to settle that but I have a guess). Models treat holding on as a calculable thing. In practice, it's more like an ordeal. It means you have to watch something you believe in fall, sometimes for YEARS, while intelligent people explain why you were foolish to believe in it, and holding anyway. Most people can't do it. But, the few who can get paid a ton.

There's a slightly older word for that ability that’s not financial at all. According to Hebrews, faith is “the substance of things hoped for, the evidence of things not seen.” Whatever you might believe about God, I haven't found a better description of a first commitment to anything.

Kierkegaard wrote an entire book about Abraham just to argue that faith begins at the exact point calculation runs out. You can reason and tippy toe your way to the teetering edge of a decision and the decision is still going to be there, sitting in a lawnchair with a beer, waiting for you. Reasoning won't make it for you. Ask anyone who’s started something.

In 1896, William James argued that some facts can't come into existence unless somebody first believes that they might. A team becomes great partly because its members just act as though it could be. A company gets its big break because someone joins way before it's safe.

“Faith in a fact, can help create the fact.”William James

Assuming our pal William was right, the long and the short aren't necessarily mirrors to each other. A short seller is really just a spectator. Apart from occasionally panicking, betting against something doesn't actually change how it turns out. A long position, held by enough people, often is exactly how it turns out. The company survives only because people stayed. That one neighborhood in your hometown recovers because families bought houses there when it was super cheap and stayed through the years. Even the really bad ones. Belief is one of the causes, and it’s just as real as the money.

Pessimism has an unfair advantage. It protects you from looking stupid.

If you say something will work and it doesn't, people will always remember. If you say it won't and it does, nobody holds it against you, and you can usually point to some random part of your argument that holds up. Believing in something out loud means you have to agree in advance to look dumb if you're wrong. Most of us learn very early to avoid that and the habit follows us into how we spend our entire lives. Very capable people can easily end up living a hedged life. These people will keep their options open for years and talk about their own commitments from only a safe distance. They stay ready to say they saw it coming when things don’t pan out.

Lewis Hyde wrote that irony “has only emergency use.” Carried over time it becomes “the voice of the trapped who have come to enjoy their cage.” Trust me, I've sat in that damn cage plenty of times. Keeping every option open can feel dangerously similar to freedom, but if you’ve ever dabbled in trading options you know that they expire00:10. A person can spend a whole life keeping doors open before they realize they never walked through any of them.

The people I admire most give up options on purpose. They picked a person, craft, or maybe a company or a place, and they closed all the other, sometimes shinier doors so they could go all the way through one. On the outside that might look dumb and naive, but up close it’s the only way anything gets built.

Building has to start with a belief you can be embarrassed by.

The most wildly popular short right now is the short on people.

You hear it absolutely everywhere. AI will write the code, read scans, draft contracts and answer phones. People will be nothing but an expensive input that clever companies engineer/optimize away. Some of this probably will happen. Whole kinds of work will change and some will disappear. I’d be lying and overly idealistic (even by my standards) to pretend otherwise. As a theory of where value goes, though, I really believe it has the entire trade backwards.

A technology replaces some of what people do and makes the rest worth more. When the price of something falls, the value of its complements always rises. When calculation became nearly free, the people who knew what was worth calculating became more valuable. William Baumol noticed in the 1960s that a string quartet needs the same four musicians it needed two hundred years ago AND musicians earn far more than they did because productivity rose everywhere else and pulled their wages up with it. Whatever can't be automated keeps getting relatively more expensive.

The real question is which parts of human work can't be automated? I think the best answer comes from Aristotle from more than two thousand years ago. He split knowing the general rules from something he called “phronesisφρόνησιςPractical wisdom: knowing how to act well in this situation, with these people, now.,” which is basically knowing how to act well in a particular situation, with these particular people, at this particular moment, when there isn’t a rule in the book that quite fits. Machines are becoming extraordinary at the general. The particular judgment though, like this person for this team, this decision in this company this week, still belongs to people. Every time the general improves, it makes the particular much more decisive.

Plus, who answers for things? A machine can recommend something, but it can't be held responsible for it. When a bridge fails or a drug hurts someone, people want to know who decided. The more work systems do, the more that person matters.

And trust might be the least automatable thing of all, because it's made of nothing but sweet, sweet, time. Nobody can bypass ten years of someone keeping their word.

I'm unapologetically optimistic. I think AI will be the most important technology of my life and all our lives. But (and this is a strong but), I also expect it to raise the price of a great person. Josh Kushner at Thrive calls his version of this view being long humans. I think that’s awesome.

Technology will not arrive at a shipyard, school, hospital or a power plant by itself. There needs to be a handful of people who carry it there and only then, decide how it gets used. The most consequential work of the next decade will be done by groups small enough to sit around one table.

People have been shorting this country since before it even existed.

The men who signed the Declaration of Independence closed it by pledging “our Lives, our Fortunes and our sacred Honor” to an unmodeled outcome. By December, the bet was pretty shaky at best. The continental army had been driven out of New York and were chased across New Jersey. Not to mention, most of the soldiers' enlistments ran out at the end of the year. Thomas Paine (the common sense GOAT) said that these were “the times that try men's souls,” and that the summer soldier and the sunshine patriot would shrink from the cause. On Christmas night Washington took what was left of the army back across the icy Delaware and won at Trenton.

Buying the dip!

11 years after the Declaration, when the last delegates signed the Constitution, Benny Franklin looked at the half sun on the back of George Washington's chair. James Madison wrote down what he said:

Through all those months of argument he hadn't been able to tell whether it was rising or setting, and now he knew it was rising.

He was 81 and still long.

In 1989 a Japanese company bought a controlling stake in Rockefeller Center, and “serious people” agreed the future was being made in Tokyo. They had a ton of evidence. Japan's stock market peaked that December and didn't get back to its high for 34 years. Despite it all, in the meantime, companies that didn't yet exist came to organize how most of the world searches, shops, talks and computes, and nearly all of them were American. The people making the case for Japan were early and had solid arguments. For anyone who is short, being early costs the same as being wrong.

Everyone knows the case against the country now. Parts of it worry me significantly more than the case from 1989 would have. Federal debt is enormous. Our politics are incredibly corrosive in a way that visibly wears on everyone. In a lot of the cities where the best jobs are, a young family can't afford a house. Most industrial skill left with factories a while ago and skills always come back slower than factories do. Our education system needs an overhaul from the bottom up.

An economist (Albert Hirschman) wrote a short book in 1970 about what people do when something they belong to starts to decline. They can exit and leave OR they can use their voice and stay to fix it. What decides between the two is loyalty, which keeps people inside long enough for their voice to matter. Exit is always available and will always feel smart. A country gets better when enough of its most capable people choose voice.

Which is another way of saying when enough of them stay long.

The evidence on that is actually pretty good compared to what everyone’s mood suggests. This is where the most capable people in the entire world decide to build their lives and they STILL come here. Most of the frontier of AI is being built here. Most of what reaches orbit goes up on American rockets, made by a company that was founded in 2002. The country produces about a quarter of the world's output with about 4% of its people. You can still start something with four guys from college and money from strangers, fail in public, and then start again. And nobody thinks less of you for it. That’s the best thing we’ve got.

When we were in the middle of a war the country could very easily have lost, Lincoln wrote to Congress, “We shall nobly save, or meanly lose, the last best hope of earth.” He was describing a future that depended on what people chose to do. That still is, and always will be, the situation. A country's future is partly a vote. Every talented person who decides it's over has removed themselves from the actual work that would have proved them wrong.

Everyone already holds a few long positions, whether or not you call them that. That might be your work or the place you live. People you'd call at 3am. Your country. And hopefully yourself. Most of us never actively decided to own these, and we hold them anyway.

If being long is a choice, it gets made in ordinary decisions, most of them small and more than most of them boring.

You stay with one job long enough to become very good at it while shorter, better paid paths stay open. You hire someone super early in their career and spend a year teaching them, which is a position on who they'll become. Some are about place. A company builds its next plant here and stays long enough for the effort to compound. And some are about people. You don't drop a friend in the worst year of their life. That’s the only year a friendship really gets tested.

The best long investors have a habit that looks really weird from outside. When something they believe in falls for reasons that don't impact why they believed in it, they buy more. Most of us do the complete reverse with all the things we care about. Whatever it might be. We pull back when they're struggling and lean in as soon as they're thriving. The life version of adding on the dips is showing up harder when believing is the least cool thing you can do. Like for the country when people say it's over and for people when everyone says machines will make them unnecessary.

Ecclesiastes has a really old version of this advice.

“Cast thy bread upon the waters: for thou shalt find it after many days.”Ecclesiastes 11:1

You can't see the return from the shore, and it will rarely come back on your schedule. You just commit to it anyway and it comes back…often from a direction you didn't expect.

Optimism the way I mean it is much more a position than a temperament. You have to take it knowing the massive case against it, and you hold it until the reasons change, which is usually long, long, after it stops being comfortable.

It might not work but that's what makes it worth anything.

When they dip, add more.