Asset management clients of Financial Planning Associates, Inc., your preliminary third quarter asset management reports have been posted to your secure web folders. As the table below indicates most of the standard investable asset categories lost value during the third quarter.
(3rd quarter category total returns)
|iShares Gold Trust (IAU)||-9.02%|
|iShares Russell 2000 (IWM)||-8.29%|
|Vanguard Global ex-US Real Estate (VNQI)||-5.72%|
|WisdomTree Emerging Markets Local Debt (ELD)||-5.29%|
|SPDR DB Intl Govt Infl-Protected Bond (WIP)||-5.02%|
|iShares MSCI Emerging Markets (EEM)||-4.77%|
|PowerShares International Corporate Bond (PICB)||-4.67%|
|Vanguard REIT Index (VNQ)||-3.62%|
|iShares TIPS Bond (TIP)||-1.70%|
|iShares Russell 1000 (IWB)||-0.10%|
|iShares Core US Aggregate Bond (AGG)||0.40%|
|Vanguard Healthcare (VHT)||3.41%|
|iShares NASDAQ Biotechnology (IBB)||4.01%|
The rate of global economic growth these days is subdued. During most of the industrial age the years following a recession would see an acceleration of economic growth leading to expansion and ultimately inflation. This time seems to be different. In my opinion the automation that was discussed in a prior posting is a significant contributing factor and the predicted economic disruptions will likely continue. Geopolitical conflicts are likely to contribute to economic disruptions as well. This is not all bad. In fact, investment risk is what allows smart investors to have the opportunity for gains above inflation over time. Still, during this time of accelerating change the uncertainty regarding financial asset values can be disconcerting.
So, I have a recommendation, a prescription for confidence during a time of fear. Read the words of Peter H. Diamandis. Read the words in his book, ABUNDANCE: THE FUTURE IS BETTER THAN YOU THINK. Dr. Diamandis, whose credentials include degrees in molecular biology and aerospace engineering from MIT, and a medical degree from Harvard sees risks ahead, but plenty of reasons to believe that our challenges will be met, and then some. The good doctor’s arguments in support of his book title are deeper than merely stating certain facts, but for my purpose here I will just reiterate a few of his facts with excerpts from the book, leaving you to contemplate the potential benefits. I don’t have room to even touch upon the problems and solutions related to healthcare, but I am optimistic that solutions are within our grasp. You’ll just need to read the book.
…there are nearly 50 million auto accidents worldwide each year, with over 1.2 million needless deaths…AI [artificial intelligence] applications such as automatic breaking or lane guidance…can…save lives every day…Each year we spend 50 billion hours and $230 billion in accident costs…because of human driver error…
…every 21 minutes YouTube provides more novel entertainment than Hollywood does in 12 months…
…So Pritchard designed a membrane with pores 15 nanometers wide. In seconds it removes everything there is to remove: bacteria, viruses, cysts, parasites, fungi and other waterborne pathogens. One filter lasts long enough to produce 6 thousand liters of water…
…These [vertical] farms already have the ability to increase the amount of food grown per harvest by orders of magnitude and increase the number of possible harvests by factors of 10. They have the potential to produce all of this food while simultaneously requiring 80 percent less land, 90 percent less water, 100 percent fewer pesticides, and nearly zero transportation costs…and the scalable potential to feed the world…
…engineers at MIT meanwhile, using carbon nanotubes to concentrate solar energy have made PV panels one hundred times more efficient than traditional models…Italy and the US will achieve grid parity [the point when renewables become as cheap as traditional sources] in two and five years, respectively…once solar hits subsidy-free grid parity it will go crazy..
…with the convergence of infinite computing, artificial intelligence, ubiquitous broadband coverage, and low-cost tablets we can provide a nearly free and personalized education to anyone, anywhere at anytime…
As my clients and readers have heard before, I believe that ongoing and accelerating improvement in the quality of life for all inhabitants of Earth is possible. Of course, we must avoid destroying ourselves in the meantime. I’m hopeful that we will solve our problems and meet our challenges. After all, problem solving is in our nature, as illustrated below.