Financially, we need to put “bad news” in perspective. Yes, there is a lot of bad news in the world that reflects the reality of today. But the bad news reported in the daily news is dwarfed by the “good stuff” that is happening to humanity. Hans Rosling, in his book Factfulness (Flatiron Books, 2018), exhaustively details the persistent and positive progress of human beings around the world.
As the author points out, this progress is not a straight line, and is not perfect. Unfortunately, this relentless progress is largely ignored amid the never-ending delivery of bad news and our own instinct for survival.
From an investing perspective, the human desire to improve one’s standard of living is what fuels this progress and is a major reason we continue to embrace global diversification within portfolios.
Human emotions drive short term movements in the stock markets. Human productivity drives longer term returns of common stocks. In light of the current investing climate, where returns on fixed-income investments (bonds, CDs, etc.) are so meager, it is imperative that investors capture the longer-term returns of this productivity in their portfolios to accentuate reaching their financial goals.