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I am an inveterate optimist.
Not because I'm blind to our problems, but because the arc of human progress has – for millenia – been towards a better future.
Yes, there are periods of reversal. Yes, there have been some awful things done by some awful people. And yes, progress is unequal and imperfect.
Those things are all completely true.
And yet… things are far better in 2025 than they were in 1975 or 1925.
And extraordinarily better than in 1825 or 1725.
Right now, most of you are nodding along.
Some, though, are saying 'yeah, but what about…'.
And you're both right.
The thing is, one doesn't invalidate the other.
More importantly? It's the exceptions that prove the rule.
There is poverty. That's awful. But it's also true that you'd be objectively better off being poor in 2025 than in 1925. And that there are far, far fewer people in poverty now than there were then.
Again, let me say: I'm not using our incredible progress to say the bad stuff doesn't matter, or that we shouldn't fix it.
I'm simply making the point that the progress has been extraordinary, and that humanity is better off today than it was 50, 100 or 200 years ago.
Economically, that's unquestionable. We're far, far, more prosperous, with far higher living standards.
As an investor, we have more than a century of stock market returns to back that up, too.
But GDP numbers alone tell the story, in Australia and elsewhere.
Still don't believe me? Ask yourself a simple question: Would you rather have our problems, in 2025, or their problems, in 1925?
A century ago, electrification was still rolling out.
There were some early labour-saving devices, but they were rudimentary and expensive.
Penicillin, responsible for saving millions upon millions of lives, was still three years away from being discovered.
Refrigeration was usually only available in the cities, and was done with blocks of ice in an ice box.
Infant mortality has fallen by more than 90%.
(More starkly, it was ten times higher back then!)
Life expectancy is around 20 years higher, now.
Medicine can cure, or treat, an order of magnitude more than it could then… and that's probably a gross underestimate.
Work is, for most of us, less dangerous and less strenuous.
We have far, far more creature comforts, and options for spending our leisure time.
Hang on… the 'yeah, buts' are back, aren't they? I hear you, but don't let the drawbacks blind you to the progress.
Remember, I'm not asking you to believe there are no problems.
I'm sure as hell not saying we shouldn't do our best to address them.
But I'm saying they are the exception that proves the rule.
And that, in all but the most extreme cases, they are a 'better class of problem' than we had 50, 100 or 200 years ago.
Because that's the other marker.
Not only have the good things got better, but the bad things have, too.
We don't have to worry about most of the things our great-grandparents worried about.
We can take for granted that we'll avoid almost all of them.
Which is great, except when taking things for granted means we don't notice, or appreciate, the progress we've made.
Imagine going back in time and asking your then-25 year old great-grandmother what her worries were.
And then being able to explain to her, through her incredulity, that those worries wouldn't exist in 2025.
If you wanted to really blow her mind (or just leave her totally nonplussed), try to describe all of the extraordinary things that we have at our disposal in 2025.
Labour saving devices, machines, production lines, medical procedures and medications, democratic participation, leisure time and options, entertainment… the list goes on.
Yes, like you, I think we've probably overshot in some areas, too.
But if you're only seeing the shadow and not the light, I think it might be worth taking another look with fresh eyes.
Why?
Well, life is better if you're an optimist. Not a Pollyanna; an optimist.
If you think things are likely to be good, and to get better, not only will you be happier but, overwhelmingly, you'll be right.
And that's even before we look through an investor's eyes.
You've heard this from me before, but the story of the stock market over the last century and a quarter is one of extraordinary value creation.
And, importantly, that's despite, not an absence of, all of the bad stuff that happened over that time.
World Wars. Regional wars. Cold wars.
Recessions. A Great Depression. An oil shock or two.
A couple of worldwide pandemics.
Outbreaks of inflation.
Bubbles and booms. Corrections and busts.
Terrorism.
Occasional bad governments, here and overseas.
You get the idea.
But just for effect, imagine if I'd given you, in 1900, that laundry list. And I told you that they weren't just idle speculations, but guaranteed to happen.
And then told you that, despite all of that, the ASX (and its forerunners) and the US stock market would enjoy extraordinary returns between 1900 and 2025.
You'd have called me crazy. You'd have reiterated my own list, slowly, as evidence of your view.
The good thing is that we know, with hindsight, just what happened.
Optimism won.
Not every battle – those were some terrible things with awful human consequences for many.
But overall, it won. Handsomely.
And when did we reach our economic peak?
In 1918, when the war ended? No.
In '45? No.
With the boom in post-war spending?
When we perfected the production line?
When the then-boss of IBM predicted there might be a global market for perhaps 5 (yes, five) computers?
When we put man on the moon?
When we invented the internet?
All 'no'.
Is it now, in 2025?
I mean, maybe. Maybe you're a pessimist who can list a dozen reasons the future will be worse than the past.
But the lesson of history is that such a prediction is dangerously -wrongly – pessimistic… and bad for your wealth, to boot.
Maybe you're already with me, and you've been nodding furiously. I hope so.
Maybe you just can't hear it, and can only see the problems. I hope not.
Or maybe this is just a welcome reminder that, even when things seem dark and uncertain, we've been here before, and triumphed.
Me?
You already know.
I'm a born optimist. A trait that meant I could keep investing during the dot.com bust, the GFC, and the COVID crash.
I don't think it's bragging to say that. Because it's nothing I did, other than believe that the story of human progress and human flourishing has many, many more chapters left to write.
That's as true now, I think, as it was in 1999, 2009 and 2020.
Just as it was in 1725, 1825 and 1925.
Not because there won't be some dark, scary or depressing times in our future. I'm not that optimistic.
But because if (and I think when), they come, we'll likely find a way out the other side to an even brighter future.
Sure, maybe 'it's different this time'.
But likely? No more likely than it was in 1825, 1925 or 1975.
The best summation? There are various versions of this line, but I quite like 'pessimists sound smart, optimists make money'.
Feel free to substitute 'progress', 'a difference' or 'a better life' for 'money', if you want to broaden it out. It's all the same.
Which is the beauty of it.
The share market is nothing more than a(n imperfect and obviously incomplete) scorecard for human progress.
Investors win because humanity wins.
Which is a pretty nice way to think about it, I reckon.
I love that there are people who look around and see problems to fix. And then get on with fixing them.
It's just important to remember that while those problems exist, they are only a small part of the larger human story.
A story of justified optimism.
Long may it continue.
Fool on!
