​Everything Getting Worse? Actually, Lots of Things Are Getting Better

Guild Investment Management  |


We’re no strangers to contrarian analysis. When the overwhelming weight of sentiment goes in one direction, we ask ourselves what potential pitfalls the consensus might be missing. Often that puts us in the position of identifying weaknesses and potential problems that others have glossed over -- sometimes because of a state of “irrational exuberance.”

Sometimes, though, a contrarian view goes in the opposite direction: it means looking for the positive aspects of a situation, or the promise of positive future developments, that the crowd has missed because of an overly negative attitude. Maybe we could call that attitude “irrational despair.”

When it comes to broad coverage of the “state of the world,” we find that media often tend to promote overly negative attitudes. Largely, this is a function of human psychology and media economics, and in the past decade, it has been exacerbated by the rise of social media and what could be called the “war for attention.” With increasing consumer engagement with mobile social media, and advertising-driven economics for the major platforms, a trend has strengthened in which media consumers’ views of the world are driven by a constant stream of attention-grabbing notifications. Of course, alarming and disturbing items grab attention more effectively. The overall impression of the state of the world created by this trend, we believe, tends to skew towards the negative. This seems to be true for people on all parts of the political spectrum -- though the things they find alarming might differ.

Sometimes we joke that accurate reporting of the most important news would have big headlines proclaiming MOST HUMANS LIKE TO HELP EACH OTHER or THE SUN KEPT SHINING TODAY. In all seriousness, however, we find it useful to balance the focus of mainstream news -- which is mostly on disruptive and troubling events and trends -- by seeking out information that illustrates problem-solving, cooperation, and positive trends.

We recently came across a website that serves as an aggregator for a lot of information like this: HumanProgress, a site curated by the Cato Institute. Its selection of news focuses on how human welfare is improving around the world, and about new possibilities for such improvement opened by technology, scientific discovery, and better cooperation. An interesting sub-site of HumanProgress, Your Life In Numbers, lets you chart your own country’s progress through time on a few big-picture metrics of human welfare: wealth, longevity, infant survival, education, and the strength of democratic institutions. The results are eye-opening, and show a big increase in key quality of life data for the great majority of the world’s countries over the last 50 years.

Drones Aren’t Just For War and Spying: Tanzanian Researchers Are Using Drones To Track Malarial Mosquitoes

Source: Centers for Disease Control

Of course, we understand that statistics can be used to convey false impressions, and we are always alert to such manipulation. But as investors, our basic orientation is to find ways that capital can be put to work to create positive returns in both wealth and welfare. We find that the perspective of a site like HumanProgress supports a constructive investment attitude -- and that’s the attitude that will keep you open to opportunity.

Investment implications: A relentless drumbeat of negative news can erode an investor’s capacity to be alert to opportunities, or cause them to downplay the potential of new discoveries, trends, and developments. If you find your psychology getting negative, include some bigger-picture news in your information diet that will focus your attention on what’s going right in the world, and not just what’s going wrong.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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