Many of the most successful investors in history grew up during a unique era. Warren Buffett for instance started investing in the 1950s and continued to do so throughout the latter half of the twentieth century up until the present.
This period was unprecedented in human history and almost unique in American history. For nearly seventy years, the economy boomed, growing at around 3 percent per year. Demographics meant that there were constantly new people entering the labor force, and technology improved dramatically, particularly during the 1970s and 1990s.
All this meant that companies could grow their profits, and returns to shareholders could increase. As the pie grew, everyone started to win.
But this state of affairs is extremely unlikely to continue for another seventy years. It’s almost impossible to imagine any investor, no matter how talented, somehow generating 20 percent returns, year-on-year, for a lifetime in the way that Warren Buffett did.
Why Investing Might Not Work
Investing might not work going forwards because of several harmful trends.
The first, and most obvious, is resource depletion. Commodities prices fell 90 percent from 1910 until the year 2000. Brent oil chart, industrial metals, food, and energy prices all collapsed due to advancing technology.
Investing might not work going forwards because of several harmful trends.
But since 2000, the reverse has occurred. By 2020, prices had regained most of their 20th-century reductions, even as technology improved. And commodities continue to soar as demand from China, India, and Africa ramps up.
The climate issue is another problem. Most experts are now predicting worldwide disasters that will reduce humanity’s ability to grow food and may render certain regions of the planet uninhabitable.
Then there are demographics. The world is in the midst of a baby bust which, in the future, will lead to far more old dependent people than young workers. Knock-on effects include slower technological development, and more of society’s resources going into funding the old.
Why Prepping In The Future
Because of these reasons, investing doesn’t have the same appeal as it did in the past. Nobody expects 10 percent year-on-year returns as were common previously, particularly the last bull run in U.S. equities.
That’s why the move now is into real assets. People want to own genuine wealth: things that they can use. And they want their properties to help them ride out the disruptions that’s on the way.
Because of this, things like water bore drilling and solar panels are becoming more popular. People are looking to generate their own essential services instead of relying on others.
Land is also becoming a precious commodity. Investors are looking for plots where they can grow their own crops in the event of global food issues.
So what does all this mean for the average investor? Fundamentally, it means a shift towards real things and out of paper assets. Old fashioned financial instruments are becoming less popular and real wealth is coming back into vogue, not that it ever really disappeared.
Ultimately, prepping is today’s wealth. And this trend may continue for a while until the current global issues resolve themselves.
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