When I step back and look at the past 100 years, I’m reassured by all the things that the U.S. and global economies survived: pandemics that wiped out a percentage of the global population, two “hot” world wars and a cold war, the disintegration of a superpower, plenty of other wars, a few nuclear plant meltdowns, economic collapses, terrorist attacks on U.S. soil, stock market crashes, and I’m sure I’m forgetting a slew of other bad things. Somehow our economy (and economies that were affected a lot more than ours) got through those things. Our will to survive is so much stronger than any adversity.
Pause for a second. Put yourself in any moment in the past century. There was always something terrible happening that seemed like it was going to tip us over the edge of the cliff. And every bad time seemed uniquely bad. But I suspect that, outside of a giant meteor hitting the earth, the global economy will survive whatever adversity is thrown at it.
An economy doesn’t need a fertile ground of calmness and abundance to thrive. Just think of Japan, a nation living on a few big rocks, with no natural resources, in the middle of the Pacific, surviving and prospering after two nuclear bombs obliterated two of its largest cities — a country constantly abused by earthquakes and tsunamis (“tsunami” is a Japanese word). Despite all that, Japan developed into one of the most prosperous nations in the world, with one of the highest life expectancies. Or think of Israel, a thriving democracy of fewer than 8 million people, surrounded by half a billion “friends.”
There are a lot of bad things brewing on the horizon, and I’d be the last person to tell you to bury your head in the sand, pray to the gods of blissful ignorance, and just hope for the best. Bad things will happen, but we’ll survive, and if history is prologue, we’ll come out stronger. In the meantime, I’ll take the advice of Oaktree Capital Management co-founder Howard Marks, who likes to say, “You cannot predict, but you can prepare.”
~ Vitaliy Katsenelson
Chief Investment Officer
IMA - Investment Management Associates, Inc
