I don’t know about you, but I’m seeing an awful lot of pop-up ads promising me a “free” guide to stop my portfolio collapsing to nothing on account of one or more of the above “catastrophes”.
They seem to suggest that you can Brexit / Trump / Corbyn / Boris / Zombie proof your portfolio – but can you or is it just a dastardly tactic?
Is this how major adviser / investment companies generate leads: by scaremongering?
Unsurprisingly, I haven’t taken any of them up on their offers for the simple reason I have enough investment nonsense sent directly to me without having to ask for more.
And the reason I don’t need any more is because of my complete and utter confidence in what we do when it comes to investing.
More accurately, it’s not what we do, rather what we don’t and won’t do:
- Think we know what will happen next;
- Think we understand why what just happened, happened;
- Pretend we know anything investment-wise about countries, sectors, individual companies, interest rates, inflation, growth rates, recessions, elections, politics.
All of the above amounts to second guessing, inferring and crystal ball gazing. The chances of us (or anyone else) being correct consistently are the same as coin-flipping in my opinion.
Instead we rely on the one and only thing we can be sure of:
That millions of employees will make billions of rational decisions each year.
Those decisions result in goods or a service their customer wants that can be sold at a profit. In turn, that means those employees remain employed and can feed, clothe and house their families. That’s their motivation for making rational decisions.
We get to piggyback their motivation and share the resulting profits by having you own a bit of all the biggest and most successful 8,500 companies around the world.
The clever bit is that, when one of those 8,500 companies fails, its resources are reallocated to a company that can make profit from them to share with you. Capitalism is self-cleansing in that way.
In aggregate, all of this is better known as global growth and that has led to unimaginable improvements in wealth and health for all humanity. Those improvements are the ultimate payoff of all those rational decisions.
Thankfully, global growth (and its benefits) is the tides of the sea, unstoppable. Of course, the tides stop if the moon falls out of the sky I imagine, but I think I cover this in the “zombie apocalypse” section below.
Brexit / Trump / Corbyn / Boris can’t stop global growth and the resultant improved wealth and health for all; it’s not in their gift.
They can interrupt it but only for a short period of time – don’t you love elections suddenly? We get wealthier and healthier despite them, not because of them.
But what about the zombies, I hear you cry?!
To me, the zombie apocalypse is akin to the idea that global growth won’t continue, capitalism will be smashed, and that the last 200+ years of massively-improved human outcomes are an aberration.
If that proves to be the case, money will be the least of your worries.
However, if you think this zombie apocalypse (or the moon falling out of the sky) is a realistic possibility, then my first suggestion is to learn to grow vegetables and how to shoot straight. That way you can feed yourself and stop other animals – humans included – eating your veg.
My second suggestion though, is what would be the point? The end of humanity will have arrived, and we can all rejoice in the end of capitalism and rationality. It could be one hell of a party, albeit a very short one.
So, the answer is simple, back the rationality of millions and ignore the irrationality of a few.
At least, that’s how it looks to me….
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