“Consider the fact that we have had 20 years of crises, war, terrorism, pandemics, and lockdowns, and still, this has been the 20 best years in history when looking at indicators of human well-being.”
– Johan Norberg, Through Progress and Peril: The Precarious State of Human Freedom
Last month, we marveled at the earnings power of the business we get to own. This month, we study the “Armageddon Question.”
Great Investors Don’t Fear Armageddon
Save the Date for July 10
We have been publishing our “Great Investors” article series for over 10 years now, and this series has consistently been our most popular content every year. We thank our loyal readers and truly appreciate your comments and feedback over the years.
As you know, we have changed the format for our “Great Investors” series from a monthly written commentary to a quarterly webinar format. We will deliver a brief talk summarizing our outlook on current events, delivered in the same style you have come to appreciate in our monthly article series. We will then have ample time for Q&A and discussion to address any additional questions you may have.
Our next webinar will be held on Wednesday, July 10th, and will be available via online live stream, and in person for those who can attend. Please feel free to register HERE.
The Armageddon Question
Over my 30 years working as a wealth manager, I have noticed that, for some unknown reason, most investors have a fascination with the possibility of an Armageddon scenario emerging in geopolitics, the global economy, and/or the financial markets. There is always a popular “Armageddon Question” du jour, and it seems to be a human constant. The current Armageddon then gives way to the next one, and then the next — but there always is one.
This question can be such a distraction to the execution of a disciplined long-term investment policy because it indulges in existential fear of a non-specific, never before experienced, and unknowable future event that will presumably destroy the very fabric of life as we know it today. It is impossible to dispel because it presumes that some event that has never happened before will happen now.
For example, the current Armageddon Question revolves around the potential collapse of the US Dollar, which may be brought about by the rapid and massive increase in our National Debt. This fear is almost an exact carbon copy of the angst that was felt when, at the same time of year back in 1971, the question du jour was, “What disaster will befall the world if the United States abandons the gold standard?”
That question was answered loud and clear when President Nixon “closed the gold window” in August of 1971, back when the S&P 500 stood at a value of around 100.
Since I started my career as a wealth advisor back in March of 1993, there has been a horrible litany of Armageddon events. I’ve seen major national currency devaluations, the collapse of the world’s largest hedge fund, the bursting of the tech bubble – one of the largest bubbles in history, a terrorist attack on US Soil, an “endless war” in the Middle East, the greatest financial crisis since the Great Depression, and the greatest pandemic since the Spanish Flu.
When I passed my brokerage license test, the S&P 500 stood at 443. Today, it is close to 5,500. In addition, the world is a much safer and more prosperous place today than it was back then.
In the words of author Johan Norberg:
All things considered, and despite recent declines, we are still at a historical high point for global liberty, and this is essential because it gives entrepreneurs, researchers, and consumers the freedom to innovate the world out of most problems. Consider the fact that we have had 20 years of crises, war, terrorism, pandemics, and lockdowns, and still, this has been the 20 best years in history when looking at indicators of human well-being.
Not bad for 20 years of never-ending disasters. The explanation? Mankind’s ingenuity and adaptability.
Helping Those You Care About
Over the last two years, the faith of all long-term investors has been severely tested. As must happen every few years, we were basically required to do just one big thing: reject the idea that “this time it’s different” and hew to the belief that “this too shall pass.” We must not doubt that we’ll get many additional opportunities to practice patience and discipline in the years to come.
Successful investing, while always fundamentally simple, will never be easy. You may have a family member, colleague, or friend who perhaps did not fare as well during the 2022-23 bear market and who you feel might have benefited from the sort of advice you were receiving. Should that be the case, we would certainly appreciate your introducing us to them. We very much enjoy working with you and would welcome the opportunity to offer the same level of planning and service to people whom you care about.
You are more than welcome to bring a friend or family member to our event on July 10th or to share the recording of our discussion that night.
Thank you, most sincerely, for being our clients. It is an honor and a pleasure to serve you.