The world is changing rapidly. There is growing uncertainty, fear and disbelief in our future. Ironically, this is not the biggest threat to your investments. Believe it or not, the annualized return for U.S. Stocks from 1985 to 2014 was 11.1%. The average investor’s return over this same period of time was a mere 2.5%. 1. Ouch! This didn’t even beat inflation. If you let it, the biggest harm to your investments is unbridled EMOTION.
Every generation has its share of challenges. Warren Buffet put it best when he said, “In the 20th century, the United States endured two world wars, the Depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” I would bet our grandparents and parents had the same uncertainties, fears and disbelief…I would be. They also didn’t know they lived in the greatest century the world has ever seen in the greatest country the world has ever seen. I wonder if our children and grandchildren will be saying the same. Consider this:
- Take a gander at which country is #1 in natural gas production, nuclear production and refined oil output production, #2 in coal production, and #3 in oil production as well as exporting goods and services… The grand ole’ U.S. of A!
- Did you know global GDP (the monetary value of all final goods and services produced) has grown from $22.2 Trillion in 1990 to $78.0 Trillion in 2015? That’s more than a 250% return!
- In 2005, 39% of the world population was considered middle class. This is expected to grow to a whopping 53% by 2025!
- Have you thought about the dramatic decrease in global violence? Yes, you read that correctly. During World War II 3.7% of the world population was killed. Only 0.1% of the world population was killed in Vietnam. And better yet, only 0.01% has been killed in the 21st century conflicts.
- Our quality of life is better than ever! Compared to 1950—80% of Americans own a home versus 55%; 90% have air-conditioning versus 0%; 75% have computers versus 0%; 90% own cell phones versus the 60% that owned landline telephones; $44,000 is the average income today versus an inflation adjusted $11,000; 88% is the high school graduation rate versus 41%; Only 9% of seniors live in poverty versus 50%.
- The American dream is real! Did you know 80% of our great nation’s millionaires didn’t inherit more than 10% of their wealth?
- Do you know who the top value-added MANUFACTURING country is today? You better believe it—the U.S.A.
The world is rapidly changing, but just remember…these might one day be the “good ole’ days.” Try taking the “glass half full” perspective and don’t let your emotions threaten your financial future.
References:
(All information compiled from Oppenheimer Funds’ Compelling Wealth Management Conversations)
- S&P 500 Index & Average asset allocation investor return based on analysis by DALBAR, Inc. which utilizes the net aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior.
- Ned Davis Research, 2013
- World Bank as of 12/31/15
- Middle Class Data: Brookings Institute, 2012, Population Data: World Bank: Health and Nutrition and Population Statistics. Forecasts may not be achieved.
- Statistics on Violent Conflict, 2013
- Federal Reserve Bank of Boston, Statistical Abstract of the U.S., International Labor Organization, United Nations, Bureau of Labor Statistics, as of 12/31/2013. “It’s Getting Better All The Time: 100 Greatest Trends of the Last 100 Years.” Stephen Moore & Julian L. Simon
- United for a Fair Economy, 2011 and thomasjstanley.com.
- United Nations Industrial Development Organization, 2015.