Let’s face a hard truth – being optimistic about the future is hard; being pessimistic about it is easy.
But why is that? Why is it so much easier to be pessimistic than optimistic?
Look, I get it. There are a lot of things that are happening today that you can be pessimistic about – politics being one. The other reason it’s easy to be pessimistic is that it’s omnipresent. The media (both social and mainstream), our friends, family, and co-workers, all stand ready to feed into our own pessimism.
And if you’re not pessimistic, hop on social media or watch the evening news. The media figured out long ago that optimism doesn’t pay the bills; pessimism does.
With the state of the world today, there is no doubt you will find an ear to bend on how bad things have gotten.
Unfortunately, I’m not the ear you want to bend, because I can’t help but be optimistic about the current as well as the future of our world.
How can you not be?
It’s easy to be optimistic when you look through the lens of history.
I think I’m as optimistic right now as I have ever been when I think about the next 10, 20,30 years.
My optimism is built in part on my July 27th PCN, which looks back at various holding periods for investors.
Building on that PCN, I also took a deeper dive into long-term real growth (adjusted for inflation) in U.S. GDP per capita, going back to 1850.
Look at this chart:
I think we can agree that this chart from the Maddison Project Database goes back a very long time.
Just look at the long list of things that have happened since this chart began:
· 1.3 million Americans have died while fighting nine major wars.
· Roughly 99.9% of all businesses that were created went out of business.
· Four U.S. Presidents have been assassinated.
· 30 separate natural disasters killed at least 400 Americans each.
· 34 recessions occurred, totaling 48 years. BTW, the number of forecasters who predicted any of those recessions rounds to zero.
· The equity market fell 10% from its most recent high at least 111 times during this period and lost a third of its value at least 13 times.
· Inflation exceeded 7% in 22 years during this period.
· And my favorite statistic in this chart – the words “economic pessimism” appeared 39,000 times in newspapers according to Google.
And yet, look at the growth.
How is that even possible?
Optimism, that’s how.
For the skeptics in our group, yes, comparing 1850 to today is unrealistic. I get that, I do.
However, this chart serves as an important lesson in pessimism – it hasn’t historically paid off for investors to be pessimistic.
There will always be conditions in which everything can go wrong. Investors have always faced that possibility.
However, we live in the greatest and richest period in all human history.
John D. Rockefeller was the richest person on the planet a century ago; his estimated net worth at the time of his death in 1937 was $1.4 billion. That’s $631 billion in today’s dollars.
And despite all his massive wealth -
· He never flew in a jet.
· Never had GPS
· Never had the internet.
· Never had a smartphone or a computer.
· Never saw mankind reach the moon.
· He never had penicillin, or any antibiotics for that matter. He didn’t know about germs and couldn’t be vaccinated (as vaccines were not yet widely available).
· He never saw the eradication of Polio & Smallpox, two of the biggest causes of childhood mortality.
· He never saw a liquid-fueled rocket.
· Never saw the human gene sequence get mapped out.
· He never saw substantial declines in global poverty.
· Never sat in an air-conditioned home.
All these things he never saw.
Which period in human history would I most want to live in? For me, it’s a no-brainer – today.
Where all those things that Mr. Rockefeller’s wealth couldn’t bring him, everyone can experience today.
Stay the course, my friends.