The Only Way to Invest
von Matthew Argersinger, Motley Fool Senior Investmentanalyst - 2. September 2014
Think back for a moment about all of the dire, disconcerting, and deadly predictions that have been made about the economy, population, environment and the world at large since you’ve walked the Earth. Here is probably how some of them have gone:
- “We’re going to run out of oil in 20 years.”
- “Someday there will not be enough food to feed the world’s population.”
- “Soon all of the world’s forests will be wiped out.”
- “It’s only a matter of time before we run out of clean water.”
- “The next stock market crash is right around the corner. Sell everything. Now!”
These predictions, which are made routinely every year by really smart people, are all predicated around the same idea: Major disasters are inevitable and growth is limited because of bad human behavior and finite natural resources. How can we possibly expect our children and grandchildren to enjoy a high standard of living when the future looks so bleak?
Why You Should Be Optimistic About the Future
Thank goodness we have optimists like renowned scientist and author Matt Ridley. Ridley is the author of the acclaimed book “The Rational Optimist” and also a member of the British parliament. As Ridley has argued so often, humans keep inventing new ways of doing things, creating substitute inputs or making resources and outputs vastly more efficient. Here are examples of man’s miraculous achievements, a few of which Ridley shared in a recent editorial piece in The Wall Street Journal.
- Today, computer connectors contain 100 times thinner gold plating than they did 40 years ago.
- The storage cost of one gigabyte of data has fallen from roughly seven thousand Euros in 1990 to less than two Eurocents today.
- Because of yield improvements, we’re likely to need less farmland in 2050 than we have today to feed a much larger global population.
- We’re using half as much water today than experts predicted we would be 30 years ago.
- In just the last 5 years, the cost associated with human genome sequencing has fallen more than 99%.
What prognosticators nearly always get wrong is man’s ability to innovate and solve really big problems. Technology and affluence, according to Ridley, have actually led to much less human impact on the planet, not more. Most would expect, for example, that a future population of 10 billion people enjoying a German or American standard of living would have devastating consequences for the planet.
But that isn’t the case. As Ridley points out, richer people don’t need to collect firewood or bush meat from natural forests. Instead they use electricity and farmed chicken, which consume far less land and resources per capita. That’s why Haiti, for example, is 98% deforested whereas the U.S. and Europe stopped reducing its stock of forests years ago – in fact, the number of trees in the U.S. is likely to grow in the coming decades thanks to smart replanting and reclamation of brown zones.
Like many optimists, Ridley thinks that alternative energy sources will slowly but surely replace coal, oil, gas and other fossil fuels. One of the big areas for technological advancement will happen in solar. After all, the sun is the cleanest, cheapest and most abundant form of energy we have. Germany, of course, has been at the forefront of solar energy expansion for years. Thanks largely to solar, many environmentalists think Germany will exceed the government’s goal of having 35% of the country’s energy supplied from renewable sources by 2020.
There is one potential problem with solar energy, however, that I’m sure the world’s pessimists are eager to point out. Solar panels (at least today’s version) depend on tellurium, one of those rare elements only found in select places in the world. Surely, we’re going to run out of that someday, right?
The estimated supply of tellurium on Earth: one million years.
Investing the Foolish Way
At The Motley Fool, we take a rational optimism toward our investing. We know there will always be dark times for the economy, the stock market and the world. And we don’t pretend that we can see through every dark cloud. We just know that humans and businesses are capable of extraordinary things. Those forces almost always win out in the long run against today’s doubters, pessimists and short-term crises.
It’s why, for instance, we recommended Tesla Motors (FRA: TL0) in several of our U.S.-based investment services, when so many doubted that there could ever be a viable – let alone successful — electric car in the marketplace. It’s why we’re excited about 3D printing companies, such as Stratasys (FRA: SCY) and Voxeljet (FRA: VX8A), because they have an opportunity to drastically alter global manufacturing processes. It’s why we’ve recommended Yandex (FRA: YDX), the Russian Internet search giant, even as the Kremlin moves closer to an all-out war in the Ukraine.
Investing in some of today’s best growth stories and having the courage to hold onto them through dark times could be your ticket to extraordinary investment returns. Just remember to be optimistic and rational about the future. It’s the only way to invest.
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Matthew Argersinger owns shares of Yandex. The Motley Fool recommends Stratasys, Tesla Motors, and Yandex. The Motley Fool owns shares of Stratasys and Tesla Motors.
Think back for a moment about all of the dire, disconcerting, and deadly predictions that have been made about the economy, population, environment and the world at large since you?ve walked the Earth. Here is probably how some of them have gone:
?We?re going to run out of oil in 20 years.?
?Someday there will not be enough food to feed the world?s population.?
?Soon all of the world?s forests will be wiped out.?
?It?s only a matter of time before…