The tragic events in Ukraine are hard to watch. Shortly after the invasion began the 10 o’clock news was about to start, and my wife said to me “I don’t want to watch the news, I’m going to bed.”
25 minutes later she was still sat there, transfixed, unable to stop watching.
I think from eons of evolution we are hard wired to seek out bad things, so we know what to avoid.
I can’t blame the media for feeding this news to us; they give us what we want to consume. But one of the problems with bad news is that it happens quickly; earthquakes, volcanoes, riots, invasions, pandemics are all rapid if not instantaneous events that quickly grab our attention.
On the other side of this equation is progress. Progress happens slowly, steadily, incrementally but it also compounds, month after month, year after year.
Let’s use The World Bank statistics on poverty as an example.
In 1990, 36% of the world’s population lived in extreme poverty, defined then as less than $1 per day.
By 2017, this had reduced to 9.3% of the world’s population, then defined at $1.90 per day.
That is a dramatic difference. The pandemic will slightly reverse that trend, but:
- Since 1990, 1.2billion people have been lifted out of extreme poverty.
- Since 1990, on average, just over 109,000 PER DAY have been lifted out of extreme poverty.
I had to triple check those figures because I’ve never seen them mentioned in the media.
Feel free to double check them yourself: https://www.worldbank.org/en/topic/poverty
I could have just as easily used The World Bank’s education statistics here to show similar progress:
I bet you’re now thinking “this is all very well, but what about the current situation in Syria / Yemen / Ethiopia, never mind in Ukraine?”
Psychologists call this the availability bias – we are all guilty of immediately thinking of current events to extrapolate back to what happened in the past. Of course there has been terrible events during the last 30 years, the path of reducing poverty is not a straight line and has had bumps along the way; think of the 2015 earthquake in Nepal, the economic collapse in Venezuela or civil wars in numerous Western African countries.
But as poverty reduces, people have more money, and they spend more money. They consume more. Rather than walk, they buy bikes and then motorbikes. They spend more money on healthcare, medicine, better food and drink, better housing, they visit relatives in the city etc, etc.
So, is the news at the moment bad? Yes.
Isn’t the news always bad though? Yes! Other than the token short clip at the end of evening news (“And finally…”) giving a light-hearted story about a cat being rescued from a drainpipe, when was the last time you saw something positive and uplifting early on in the news?
Think about the news since the Credit Crunch in 2008 since when we have had commodity booms and busts, financial distress across Europe and America, raging inequality between the rich and poor, extreme political outcomes, lowest ever interest rates, growing distrust between nations, a global pandemic and now war on European soil.
If you could have foreseen what would happen since 2008 you would probably have stayed in cash, but you would have missed out on a golden period for investment returns.
But despite all these events, humanity IS getting more prosperous (and better educated). Over time, bit by bit, undoubtedly this is true. Don’t let your world view be dictated to you by the media, look at The World Bank’s stats.
This feeds into capitalism, into the companies of the world listed on stock markets that you invest in.
So what can you do when the news is bad?
- Put that news a global and historical context. Check the statistics from official, intranational bodies such as the United Nations or The World Bank. What is the long-term trend? How much have current events affected that trend?
- Ask what Warren Buffet is doing. It’s not about how much money he has, it’s about his behaviour. If he is calm, you should be calm as well. If he thinks this is a buying opportunity, so should you.
- If you are at all concerned, please pick up the phone to me or Adrian and we will explain your risk exposure and current events in terms of your longer-term plans and any actions you could take.