What I’m writing to you about today is what we can learn from the past, what our traits are as human beings and what the future might bring. Or put another way – history, anthropology and future opportunities. Let’s start with history.
V-J Day Celebrations
Church bells rang out in celebration. People of all ages danced and embraced in the streets – sometimes with those they didn’t even know! There was a collective and overwhelming sense of relief and exhilaration. The long days of agony and fear, of loved ones not returning – all that was now over. It was time to look to the future. To an exciting world full of new opportunities.
The best of human nature is the ability to look forward – our resilience and strength in the face of adversity. In the middle of this dire COVID-19 situation it is helpful to remember previous events which at the time we felt were also frightening socio-economic events. Each time people felt as though we had reached a nadir in history.
For some, you will have been there at the time of these events and they will be memorable and vivid. For others, you’ll have to consult the history books (or Wikipedia!).
Oil Crisis – October 1973
Over a six–month period, oil prices quadrupled as a result of OPEC members imposing a penalty on countries that supported Israel during the Yom Kippur War.
Black Monday – October 1987
Unlike the crash of 1929, and the Great Depression that followed, this one didn’t result in an economic recession. However, it had a massive impact on the confidence of investors worldwide. In the UK alone, our stock market fell by more than 26% in five days.
Twin Towers Attack – 11 September 2001
World stock markets collectively fell around 16% during the week of this attack. The psychological impact of this globally was huge too.
Asian Crash – 1998
Although, as the name suggests, this hit countries in Asia, it also spread to others including Russia. The stock markets fell so much in the affected regions that Sainsbury’s, at one stage, had a market valuation exceeding that of the entire Russian stock market!
Technology Bubble Burst – January 2000
At the time, companies were ludicrously overpriced just by having Dotcom after their name.An example was a high-end fashion retailer called Boo.com. Launched in 1999, they burned through $135 million in venture capital in less than 18 months before being placed into receivership in May 2000! The problem was too many Dotcom companies chasing too few users. When the bubble burst in 2000, there were only 400 million people online worldwide compared to 4.54 billion today.
Financial Crisis– 2008
The worst economic disaster since the Great Depression was mainly caused by financial deregulation allowing banks to engage in hedge fund trading with derivatives. With some of the world’s largest banks going bump, on an almost daily basis, it felt like the end of capitalism and the free world. Arguably the effects of this crisis were still with us until recently.
So...what’s with the history lesson? What is the relevance of all these events?
I believe that, even amid this doom and gloom, the relevance of these events will give peace of mind due to a greater understanding of how they fitted into the “bigger picture”.
Amid each of these historic events, for those who were there it almost felt like the end of the world – or at least “as they knew it”. But humans have the ability to be creative, imaginative, resourceful and resilient in the face of change. Also, no matter what Donald Trump, Narendra Modi, Vladimir Putin and other nationalists may believe, anthropologists tell us that humans are inherently communal and collaborative.
Now for my last example of history – which absolutely hits the nail on the head. During all this despair, it is important to remember how and why businesses exist and prosper. Here comes the simple but true and very poignant example:
What were the three questions most asked by East Germans as they escaped to West Germany when the Berlin Wall fell on the night of 9 November 1989?
Their biggest worries were:
Where can I buy a Coca–Cola?
Where can I get some Levi’s?
Where can I eat McDonalds?
What that shows us is, there will always be people who want to buy things and consequently there will always be companies making these things for people to buy. So, all that you have to do, is be an owner of these businesses for you to benefit as a result.
Simple. That’s it!
So, when we exit from this global crisis, then you need to remain a part-owner of these businesses – via an ISA, pension, bond and/or trust accounts – to financially benefit.
Now let’s end on a positive note looking forward. Just imagine, the elation, joy, happiness and relief the whole world will feel when all of this is over. The joy of being able to socialise. To be able to shake hands and embrace people.
And there will be many profound changes in the way we live – perhaps for the better. For example, from a business point of view, people will travel less to work and to appointments, after experiencing the ease and advantages of working remotely. Even more importantly, people and communities will have supported each other and built new and lasting alliances. As the African proverb says “If you want to go fast, go alone. If you want to go far, go together”.
The world will be different – there will be new and exciting companies to deliver the goods and services that the future requires. And you, as an investor and consumer, will stand to benefit. You will have played an important part in helping that recovery just by remaining invested.
True fact: Following the end of WWII, the world enjoyed 25 years of economic growth! Similar should happen again.
And what I do know to be true is that, reflecting again on the V-J celebrations,“we’ll meet again, don’t know where, don’t know when, but I know we’ll meet again some sunny day…….!!”
Colum Wilde – Founder and CEO CFP Chartered MCSI
Chartered Wealth Manager