It is easy, reading the news on any given morning, to conclude that things are getting worse. The twenty four hour cycle is built that way. It rewards the sudden and the alarming, and it has very little interest in anything that improves slowly.
But slow improvement is exactly what the longer data shows.
Two centuries of progress
Since 1990:
The number of people living in extreme poverty has fallen from around 2.3 billion to approximately 831 million.
More than two billion additional people now have access to safely managed drinking water.
Life expectancy, literacy and access to electricity have all moved in the same direction over the same period.
None of this is a straight line, and none of it was inevitable. But taken together, it points to something simple. By almost every measure that matters, people today are healthier, wealthier and more productive than at any point before now.
Where capitalism fits in
A significant part of that progress has come from capitalism. Not a flawless system, but a remarkably durable one. Businesses form, employ people, build things people want, and compete to do it better. When that competition works, living standards tend to follow.
What this means for your plan
This is where it connects to your own portfolio. When you hold shares, directly or through a fund, you own a small part of thousands of businesses doing exactly that, around the world, at once.
That is the reasoning behind a diversified, evidence based portfolio rather than a handful of favoured names or countries. You are not betting on which business wins. You are participating in the broad, slow pattern above.
Resisting the urge to act on it
It is also the reasoning behind staying invested when a year feels uncertain.
There is a common instinct, after markets have done well for a while, to assume a reckoning is due. There is an opposite instinct, after a difficult year, to assume the trend has turned. We understand both instincts. The evidence supports neither. Progress does not become less likely simply because it has already happened for a long time, or more likely because it has just paused.
We do not know what the next ten years hold, and we would be wary of anyone who claims to. Our job is not to predict the outcome. It is to make sure your plan is positioned to benefit if human effort and ingenuity keep doing what they have done for the last two centuries: slowly, unevenly, moving things forward.
Figure: global health and wealth, 1800 to 2025 – life expectancy against income per person, by country and population.
Source: Albion Strategic Consulting. Data source: gapminder.org. Bubble size corresponds to population size.
What this means for you
You do not need to predict markets to benefit from them. A diversified, evidence-based portfolio is built to capture this pattern, not to outguess it.
The instinct to act, whether markets have just risen or just fallen, is usually the thing worth resisting, not the plan itself.
Your plan already accounts for this. Staying invested through an uncertain year is not a gamble. It is the plan doing exactly what it was built to do.
That is the evidence behind staying the course. Not optimism for its own sake. A longer view, applied to your own plan.
If you would like to talk through what this means for your own plan, we are glad to.
Risk warnings
This note is for general education. It is not investment advice, and does not take account of your individual circumstances or objectives. Nothing in it should be read as a recommendation to buy or sell any investment. Views expressed are our own at the time of writing and may change without notice.
The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is not a guide to future returns.
Wells Gibson is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 731027).
