We do not all have the same ideas about the future. Some of us believe that the South African economy is on the brink of a collapse and you have to externalize all your assets, and others believe that the United States faces an imminent meltdown and that you have to sell all your dollar-based investments. Some people believe that the dominance of the West will soon be overtaken by the rising of the East. Many people have a glass-half-empty attitude, but then again you get the eternal optimists who believe that we are destined for better times.
Whatever your view of the future is, you will probably be wrong; but one thing you can take to the bank: human beings are tenacious, adventurous, ingenious and adaptable. We have survived so many setbacks and battled so many obstacles over thousands of years that we have become problem-solvers and survivors.
As investors we have to realize that almost everything we invest in is man-made, and has as its foundation the unpredictability of our very nature. The entire financial system consists of counterparty transactions with very little collateral as support. If you go back to every single financial meltdown we have had, you will find that human engineering played a big role.
There is a quote from Sue Orman that goes something like this: “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life”. The only way to do this is to approach investing the same way you approach a relationship. There has to be some very strong fundamental reason you enter into the relationship, knowing that there will be ups and downs and loads of uncertainties, but that the foundation will be strong and that you do not have to sweat the small stuff.
In essence, investing in equities is an investment in human nature, warts and all. If you decide to make that commitment, you will have to sometimes just keep quiet and keep your eyes on the horizon, knowing that one day the sunset will be glorious.
