On a recent trip to the Goegab Nature Reserve outside Springbok, we were sitting outside around our crackling fire. Through the Namaqualand quiver trees we could see the sun sinking into the horizon while the full moon was rising behind us. Ice clinked in our glasses and the smell of grilling lamb chops filled the air. This was as close to paradise as anyone could imagine and yet the conversation was all about how bad things were.
Why are we like that? If you do even a little research you will find that the world is a better place now than it has been in the past. If you look at the accompanying illustration you will see how things have improved in some key areas of civilization, but you might still not feel happy.
Perhaps it is because there is a big disconnect between happiness and standard of living. It is clear that the average standard of living has improved over the last two centuries but our personal happiness has not necessarily kept up with it. The saying “the more you have, the more you want” springs to mind.
Why is this important? It is important because the knowledge that we have come a long way towards improved living conditions, as well as the notion that our work is worthwhile, forms the basis of our self-respect as individuals and is a necessary condition for improvement. That brings us back to the world of investing and two very important elements thereof, namely consumer and business confidence. If we are not happy with what is happening around us, we tend to become conservative in the way we invest our money. We increase our emergency reserves and businesses decrease their capital expenditure. The irony is that these actions have been proven to result in missing out on better returns and making us even more unhappy.
We often see that people who are very successful, are also very positive by nature. Something they all have is common it that they realized a long time ago that happiness and positivity is a state of mind, whereas the conditions in which you live are a reality; and that the latter should not overshadow the former.
The markets at the moment are at all-time highs. Borrowing a slide from the well-known Morgan Housel we can see this reflected in the S&P500.
If we have legitimate reasons in our personal lives that make us negative, angry and sad, we can only hope and try to sort them out. The world is a better place now than decades ago and our investments are doing well, all of which provide us with a solid foundation for the future.
