The Coming Economic Collapse That Never Was
by Alexander Green, Investment U Chief Investment Strategist
Friday, March 2, 2012: Issue #1721
At a conference here at The Ritz-Carlton in Naples, Florida, I heard an increasingly common question. An attendee asked me how anyone could feel good about investing in stocks with economic and political prospects so bleak.
I reminded him that men and women have been saying that the world is going to hell in a hand basket for, oh, the last 5,000 years or so. (As the old proverb says, the dogs bark but the caravan moves on.) It’s important to remember that so much pessimism exists today because the national media delivers a terribly skewed view of the world we live in.
As I have written in this column before, there are plenty of reasons to be bullish on equities, including low inflation, zero interest rates, rapidly developing overseas markets, cheap valuations and all-time record corporate profits.
But that’s just in the short term. There are even better reasons to be bullish longer term. Understanding this will make you a better investor.
Consider, for example, Matt Ridley’s book The Rational Optimist. Ridley, a scientist, journalist and professor at Cold Spring Harbor Laboratory in New York, points out that the world is actually improving dramatically and the pace is quickening, thanks to rising personal and economic freedom and evolving technologies, medicine and trade practices. Yes, the world is far from perfect, but it is getting better.
Peter Diamandis and Steven Kotler strike a similar note in their new book Abundance: Why the Future Will Be Much Better Than You Think. In an adaptation published in the February 13 issue of Forbes, they point out that the trend isn’t nearly as dire as many seem to believe. Quite the opposite, in fact:
“During the past century child mortality decreased by 90% while the average human life span increased by 100%. Food is cheaper and more plentiful than ever (groceries cost 13 times less today than in 1870). Poverty has declined more in the past 50 years than the previous 500. In fact, adjusted for inflation, incomes have tripled in the past 50 years. Even Americans living under the poverty line today have access to a telephone, toilet, television, running water, air-conditioning, and a car. Go back 150 years and the richest robber barons could have never dreamed of such wealth.
“Nor are these changes restricted to the developed world. In Africa today a Masai warrior on a cellphone has better mobile communications than the President of the United States did 25 years ago; if he’s on a smart phone with Google, he has access to more information than the President did just 15 years ago, with a feast of standard features: watch, stereo, camera, video camera, voice recorder, GPS tracker, video teleconferencing equipment, a vast library of books, films, games, music. Just 20 years ago these same goods and services would have cost over $1 million …
“Right now all information-based technologies are on exponential growth curves: They’re doubling in power for the same price every 12 to 24 months. This is why an $8 million supercomputer from two decades ago now sits in your pocket and costs less than $200. This same rate of change is also showing up in networks, sensors, cloud computing, 3-D printing, genetics, artificial intelligence, robotics and dozens more industries.”
Investors everywhere should familiarize themselves with these points of view. After all, you’ve heard the doomsayers (again and again). You owe it to yourself to hear the other side of the story.
Looking at broad trends and exciting new developments provides a powerful antidote to the fear generated by relentless media negativity. Plus, it gives you the knowledge and confidence necessary to capitalize on the hundreds of great investment opportunities that exist in today’s fast-moving financial markets.
The world truly is your oyster … but only if you have the optimism to see it that way.
Good Investing,
Alexander Green
Any investment contains risk. Please see our disclaimer.
10 Responses to “The Coming Economic Collapse That Never Was”
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i am student of master and speacialization in finace. these information are very credible for my future too.
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I couldn’t agree with you more. I remember as I was growing up my grandfather saying the same thing then as their saying now.
There will some big problems in the western world, probably the USA will renage on their debt just like every other country has done since time began, but out of those ashes some thing great will start again. My biggest worry is a third world war which seems more likely as days go by. I really enjoy reading your columns
Best
Bob
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Alex – I am sick of your videos which are so darn slow. Please use the print media so the literate people can get on with their life.
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You can get to a transcript by exiting out of the video and then clicking “stay on this page” when the alert box pops up.
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Hey Alex — I have been invested in the Gone Fishing with Vanguard and am very satisfied to date. I placed about 75% of my portfolio into GF and am looking for another strategy for the other 25% — a strategy that would enhance and compliment the GF plan.As a WW!! vet, I am comfortable and enjoying life to the fullest. Any suggestions will be appreciated.
Thanks for your book and the GF idea.
Lake
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I appreciate hearing the positive for a change. And your outlook appears to have served you well, and we readers as well.
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anyone who thinks equities are worthwhile investments is a fool. we thinking people kno the market is manipulated as are all economic data that the goobermint puts out- its re elction propaganda, duh! does anyone conscious recall how the so called investment pundits stated housing, small business and consumers drive this economy? based upon your PERSONAL experience (recall peter lynch’s books and how he advocated seeing how things were around yer neighborhood), seen housing rebound, small business growth, or consumers buying chinese made crap like crazy?? NO!
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I think that making an investment case based on the proposition that progress can’t be stopped is foolish. One has nothing to do with the other. Ask all those happy iPhones owners who bought a house in 2005 (before the iPhone). Furthermore, since it is a given that humanity progresses in the long term, the market will not reward you for that but will punish you for the bumps along the way.
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Alex, Reading your positive comments are a welcome respite from the negativity in the media and on the political speakers platform, and from the doomsday view of Porter Stansberry. You have solved my concerns with retirement with your Gone Fishin’ Portfolio, and it has worked marvelously for three years. My children are using it with Vanguard. I look around me with wonder. What’s happening with health and technology is breathtaking. I have never been more at ease, enjoying the fruits of 40 years of medical practice. Keep writing, you brighten the day.
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I grew up in the 1960′s when our country seemed to be coming apart. In the 1970′s, inflation combined with economic stagnation got the name ‘stagflation.’
If we dump the leftists running our country today we can turn it around again. I have continuously invested since 1981 and never panicked during any crisis. Beware of masterminds.
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