Barry Gottlieb, the inspirational writer and speaker, recounts the following story in one of his newsletters: "A Native American boy was talking to his grandfather. 'What do you think about the world situation?' he asked. The grandfather replied, 'I feel like wolves are fighting in my heart. One is full of anger and hatred; the other is full of love, forgiveness and peace.' 'Which one will win?' asked the boy. To which the grandfather replied, 'The one I feed.'"
In this time of economic uncertainty, market volatility, political fighting, instability in many areas of the world, the European crisis, etc., I would think that many of us and our clients have two wolves fighting inside of us. One is the pessimistic wolf and the other optimistic. And as in the Native American parable, the one who wins will be the one who is fed.

At a recent meeting, a financial advisor told me that he was counseling his clients to expect a long-term zero rate of return in the stock market, and his projections illustrated that. It was clear to me that this advisor may have inadvertently been feeding the pessimistic wolf in himself and feeding that same wolf in the minds of his clients. Of course, he chose to label his thinking as realistic and conservative and not pessimistic. I wonder why any of his clients would invest any of their money in equities with such a dire prediction of the future. And since most of our clients require some rate of return to reach their goals, do we enable a "What's the use?" mentality about saving for the future?
Isn't our job to encourage our clients to do what they need in order to reach their goals? Of course, we need to discuss the possible outcomes, but does anyone really believe that the long-term return of the market will be zero? Our clients look to us for advice, guidance and support. They get enough negativity from the media and other sources to feed that pessimistic wolf. Our job, in my opinion, is to feed the other wolf so that they don't agonize over every headline they read.

Of course, we have no way of controlling or knowing what markets will do in the future. However, we certainly have control over our attitudes, and those attitudes will be contagious among our clients. Agonizing over the world situation, politics, Europe and market volatility will do nothing to improve the quality of our clients' lives. We can and should be the voice of reason and optimism when they are confronted with the following fighting wolves:

One wolf says that stock market returns will be anemic for many years and that investing in equities will be fruitless. It points to recent market volatility and flat equity markets in 2011 to prove its point. The other wolf points out that there has always been a reversion to the mean and patient investors have been rewarded. This wolf believes that it's only a matter of time before markets once again revert to their historical rates of return. Which wolf will you feed?

The pessimistic wolf says that Europe is doomed and investing in the region will be financial suicide. They will never recover, claims this wolf. The other wolf, on the other hand, sees European markets at prices that are bargains and believes that those who take advantage of those low prices will be handsomely rewarded. Which wolf will you feed?

Real estate values are depressed and will not recover for many years, says the pessimistic wolf. The optimistic wolf believes that now is an excellent time to invest in real estate. He believes that those who invest in real estate will enjoy excellent returns on their money. It points to the 2011 rally in REITs as evidence. Which wolf will you feed?

Our pessimistic wolf claims that diversification does not work and that there is nowhere to invest when markets decline. He points to brief periods in 2008 and 2009 in order to prove his point. Our optimistic wolf, however, knows that well-diversified portfolios recovered from their market lows and that real estate, bonds and TIPS have since performed quite well. In spite of all the volatility, the market actually made money in 2011. Which wolf will you feed?

How can one argue with the wolf who points out that our national debt and deficit spending will eventually bankrupt the country and our way of life? We are on an unsustainable path that can only lead to collision and catastrophe. On the other hand, the other wolf believes that the deficit has never attracted as much attention as it has now. This wolf believes that our leaders in Washington will attack this problem after the election of 2012 (regardless of who wins). In spite of their recent inability to come to an agreement, there is consensus that something must be done. Our optimistic wolf believes that progress will be made. Which wolf will you feed?

On a related note, one wolf believes that partisan bickering in Washington will result in stalemate after stalemate, and none of our short- or long-term problems will be resolved. The extremes of each political party will hunker down, and nothing will get done. The other wolf is hopeful that the vast majority of the country is so tired of this bickering that they will turn to more independent candidates and the result will be a more balanced approach and real substantial progress. Which wolf will you feed?
Of course, all of the negative headlines and news has taken its toll on all of us. It seems that the political and world situations are on most everyone's mind. While we want our meetings with clients to stress their goals and progress, it seems that the subject often turns to events over which none of us have control. They are concerned and we certainly understand that. However, we need to do whatever we can to reassure them and focus their attention on their own unique situations.
The first thing we need to do is to understand that these fighting wolves are in our minds as well as our clients'. If we are to be successful in helping our clients have a more positive outlook, we must be sure we are feeding the wolves of optimism in us. Only then can we successfully feed that wolf in our clients.

Roy Diliberto is chairman and founder of RTD Financial Advisors Inc. in Philadelphia.