SAM Video Blog July 25, 2018

SAM Video Blog July 25, 2018

“Travel, Emerging Markets, and Breaking Through the Noise”: Jonathan M Satovsky discusses recent global market performance, demographic trends in emerging markets, and the ability to break free from daily headlines to focus on the long-term.

Transcription:

Good afternoon! This is Jonathan Satovsky of Satovsky Asset Management, July 2018 with a video blog update. And today I want to talk about travel. With the summer months many people are able to travel and see the world. I was fortunate to see Africa in this past month and was blown away just a phenomenal experience. And at the same time I happen to stumble into a book that I recommend called Factfulness by Hans Rosling, ten reasons we’re wrong about the world and why things are better than you think. So I thought it was actually very important because again if you just turn on the headline news you would think everything is horrendous and certainly financial markets have been very volatile. You can see the second quarter the US markets were up, foreign markets were down, emerging markets were down very sharply. Global real estate was up nicely. Bonds were down in the US and up around the world. Here’s the flip-flop from the first quarter and this again is a reminder of avoiding short-term thinking. And the first quarter emerging markets were up and everything else was down except for global bonds. So short-term thinking leads to a lot of behavioral risk. So I can’t state that enough. But why things are better than you think. In the book, Hans highlights that with seven billion people on the planet we have a billion people in North and South America, a billion people in Europe, a billion people in Africa and four billion people in Asia. And in the next 20 years we’re likely to still have the same billion people because of birth death rates and immigration in the US and North and South America, a billion in Europe, two billion in Africa, doubling, and five billion in Asia, which you know it is shown growth. So the biggest growth you’re going to see is in Africa. And so I’m thinking about why it translates into the world being better than you think. In the next five years, apparently the vast majority of population is going to be connected online. So everyone is going to be plugged in and seeing the information. It might lead to a lot of short-term behavioral problems but it is leading to higher income levels. This is people living on a dollar a day, three dollars a day, eight dollars a day, thirty-two dollars a day. And clearly, with Africa being a region that more people are living on a dollar a day or less. They’re moving up the income ladder in a dramatic way which is also helping life expectancies and the birth death rates which is adding to their population growth. And as these people come on and are increasing what they’re living on per day, they’re going to be consuming goods and services around the world and therefore you would expect that things are going to be much better over a long period of time. The last thing to show you, to prove this out, is a visual of the global markets and to give you a perspective. This is a visual of the US in blue and the green is a globally balanced 60/40 portfolio. Sixty percent global stocks and 40% bonds. And you can see over the last 20 years they’ve been virtually even because markets do flip-flop. But certainly in a short period of time when you look at it you see a lot of noise, a lot of noise in a short period of time, which leads to a lot of behavioral risk. So the headlines and the day to day looking on your cell phone at stock prices or security values, leads to a lot of short-term decisions that takes away from people’s long-term health, wealth and well-being. So with that, get out, take a walk around, travel, explore and see the world through a different lens. With that have an enjoyable summer. Bye-bye.

2018-09-02T04:05:19+00:00