There’s an evolutionary reason why most of us will join dots that usually don’t exist. Our minds start scenario planning and form a sketch of threat or doom far worse than the reality that eventually unfolds. This is a clever self-preservation mechanism, preparing us for action in case that rustle in the bushes is a predator when, in fact, it’s hardly ever the case. As the expression goes, when you hear hoofbeats think horses not zebras.

In the world of business and finance, it’s easy to get caught up in a narrative of doom and gloom. Stock markets fluctuate, companies stumble, sectors stall and economies contract. Yet, while headlines might scream disaster, a more measured look reveals that things aren’t always as bad as they seem. Let’s address some key insights into why the perception of perpetual decline isn’t always accurate—and why failure is not just inevitable but essential for growth. 

Firstly, markets move in cycles. For example, many recent US market downturns seem to be merely corrections after periods of overvaluation. When prices soar too high—often driven by speculation and over-optimism—a pullback is natural and necessary. It doesn’t mean the end of prosperity, just that the market needs to realign with reality. Expecting markets to rise perpetually without pause is unrealistic, and it’s this expectation that fuels disappointment when the inevitable corrections occur. 

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In all of this, regulation and governance are essential guardrails. A government’s role is exactly that—to create and maintain guardrails that protect all society and investment classes from externalities while fostering a positive, growth-oriented economic climate. It is not easy to create these Goldilocks conditions, and they may not always be prioritised in that order.

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Another of the biggest misconceptions in both business and investment is the unrealistic expectation of continuous double-digit growth. Economies, like businesses, have a natural rhythm. Growth and contraction are both part of a healthy economic cycle. Expecting continuous high growth without any downturns or corrections is like expecting a tree to grow endlessly without seasons of pruning. The economy, like nature, moves through phases that ultimately keep it balanced.

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Failure is Always an Option

The concept of seeing grey clouds on the horizon, or not knowing what can come next, (particularly in a smaller risk-averse economy like ours with a history of being colonised) is subconsciously tied to the notion that failure is an impossibility. The unknown is usually a think tank for building nightmarish scenarios (see Goya’s ‘The Absence of Reason Brings Forth Monsters).  

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In reality, the idea that failure is always an option allows companies and individuals to experiment, innovate, and take calculated risks. Without accepting this possibility, innovation would stall, as people become afraid of trying anything new, and nothing can ever rise from the ashes if nothing gets burned down, right? Some companies celebrate failure to foster innovation, this is in my view, a step too far and is usually a luxury afforded to giants steeped in margins and cash (Google springs to mind).  Unfortunately, here in Malta, our proximity to each other has led us to consider failure to be a taboo.

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However, despite the inherent risks, positivity in business is a self-reinforcing attitude. If we let go of optimism, there is a chance that cynicism, or equally dangerous delusion, sets in and we simply “go nuts and give up.” Optimism is the fuel that drives perseverance, innovation, and resilience. It is essential to maintain some level of positivity, even in the face of failure or slowdowns, to continue pushing forward. Without this mental framework, many would abandon projects at the first sign of trouble. It is said that the fear of a recession is in itself, part of the reason for it.

Learning from History 

History and art are full of examples of tragedy, perseverance and hard work paying off. Walt Disney was famously laid off from a newspaper job for ‘lacking creativity’

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In nations like Malta, where failure is taboo, businesses may often be tempted to continue to sink resources into undertakings long past their rescue date rather than cutting their losses and moving on. However, it’s important not to throw good money after bad. While perseverance is vital, knowing when to stop is just as critical.

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The best advice for navigating economic or business downturns is to stay the course, look ahead and occasionally glance sideways to assess competition or market conditions. Over time, things tend to right themselves, and storms pass. However, staying the course doesn’t mean ignoring risks—on the contrary, one should constantly obsess over the dangers of doing nothing.

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And if it all goes pear-shaped, remember that there’s nothing more liberating than having your worst fears realised.