Zooming Out

Zooming out

Written by Jeff Helms

The financial world is complex and constantly changing. Those changes can impact our clients and their plans for the future. As the firms founder and Managing Partner, making sense of these changes is my job. We try to simplify communication on market dynamics to make it meaningful and useful for our clients.

December 27, 2022

If the year 2022 were a fish, we’d throw it back. Between the spike in inflation, the historic rise in interest rates, the deepening geopolitical saga in Ukraine, and the less-than-optimal performance of virtually all assets around the globe, we thought we’d take this opportunity at year-end to reflect on the future a bit. And while we’re at it, add in a dash of perspective.

As we’ve noted before, the daily firehose of information coming at us through multiple news sources and social media tends to flatten our perspective; it makes us focus on the short term, wondering what will happen in the next sound bite.  The antidote for this is a healthy serving of facts about the future.  So, as we conclude this year and look to the next, it’s time to zoom out.

  • In 1970, less than half the world’s population lived in extreme poverty. By 1990, that number was 37%. Today, it’s 8.5%.  Yes, there’s more work to do here. But the global improvement in quality of life is astounding.
  • There are 8 billion humans on the planet. The Brookings Institution projects that, between 2020 and 2030, 1.6 billion people will enter the middle class in emerging markets. That’s five times the population of the US. We suspect the great companies of the world – whose stock you own in your portfolio – will have already known this and will profit from this massive uptick in consumption of housing, diapers, masking tape, cheeseburgers, vehicles, and just about every other product on the planet.
  • In 2023, India’s flagship airline will buy 500 commercial jetliners from Boeing and Airbus, the largest-ever purchase of commercial aircraft in one year, according to Reuters and Barrons.
  • When Russia invaded Ukraine in February, it first took down all the Ukrainian communications systems, including the internet. In less than a week, Elon Musk’s company SpaceX shipped hundreds of communication terminals to Ukraine for Starlink, its network of 2000 satellites orbiting the earth. Ukraine’s military has used these communications systems to target Russian positions, giving them a foothold and allowing them to advance and retake vast swaths of their country back.
  • Last week, scientists at the Lawrence Livermore Research facility announced a breakthrough in research on nuclear fusion. Fusion targets hydrogen atoms, unlike the current nuclear plants that create energy through fission. The fuel needed for fusion is abundant; many of these hydrogen atoms can be extracted from seawater. Fusion, unlike fission, doesn’t produce long-lived radioactive waste or greenhouse gases such as carbon dioxide generated by burning fossil fuels. The only byproduct of a fusion reaction is helium, an inert gas. It’s clean energy, and it’s virtually limitless.
  • In June of 1970, the world watched in awe as three American astronauts on Apollo 13 attempted to slingshot their stricken spacecraft around the moon and back to earth. NASA’s most brilliant scientists worked on the problem using slide rules. Today, the smartphone in a child’s backpack contains more computing power than was available to NASA back then. And the entire sum of the world’s knowledge is essentially free to anybody who can get online.

All these amazing developments demonstrate that the world is forever making progress toward improving global quality of life. And none of them were even imaginable before they became reality.

Our point is this: things are always getting better – they just don’t get better in a straight line. Keeping perspective and focusing on the long view are the keys to building wealth. The great companies of the US and the world will continue to grow and prosper as they always have.

We’ll be hosting another live video chat with our year-end review and a closer look at what markets might have in store for 2023 on January 25th at 3:30 pm. You can reserve your spot now. Until then, we hope you’re enjoying the holidays with your families.