"By almost any measure, the world is better than it has ever been."
In his annual letter, Bill Gates opens with a statement that I've been saying for a few years. In fact, my investment thesis begins with global peace and prosperity. It's amazing how many people snicker at this notion without ever taking a second to consider its authenticity or merits. (Of course, I've been ridiculed for reading income statements, balance sheets, and cash flow statements. There is so much misinformation out there, with less research and more rhetoric, than anytime I can remember.) Connect the dots, and in the end, the stock market reflects the current and future potential, as well as the prosperity of mankind.
It can get overbought and oversold, but the stock market's role as a barometer of human success never waivers for long. There was a time when the correlation was solely about the stock market and America's economy, but that's changed forever.
"Many nations that were aid recipients are now self-sufficient."
Last week one of the big news items came from the Treasury Department's revelation that China now holds $1.3 trillion of our debt, and Japan holds $1.1 trillion. It wasn't long ago that actress Sally Struthers pleaded with late night television viewers to give money to help the poor Chinese.
It's not just China, but many nations have come on strong after figuring out that they cannot look into the skies for bags of foodstuff to fall out of a C130 cargo plane forever. Bill Gates refers to historian James Burke's 'The Day the Universe Changed,' his book about the Renaissance and how quickly people reversed their state of decay.
The main difference here is most of these nations never had an imperial period to rediscover, or such glorious moments were too far past to serve as true inspiration.
Instead, these nations have looked to the West with admiration and envy, fueling a determination for self-reliance which rests in the DNA of all people, and has to be un-learned. Catching the West, especially America, is a daunting task; and no country will come close for a couple of decades, no matter how hard they try, or how badly we stumble. But the route to improved competition is so much easier today. There is less need for giant man-made holes and channels in the earth to lay expensive wire. Today's handheld smart phone has the computing power of NASA, when engineers toast their accomplishments with a glass of Tang.
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