The 2022 stock market downturn has many of our clients asking the following question:
What’s next?
Where does the global economy go from here? After such a long streak of solid stock market performance from 2009 to 2021 (excluding a short dip from COVID in March of 2020), should we expect much lower returns in the future?
While the answer to this question is unknown, we can use history as our guide.
Financial markets are propelled forward by human ingenuity. Curious minds seek to improve upon existing ways of meeting humanity’s wants and needs. Invention leads to growth in productivity, output, and, ultimately, return on investment.
More than 2,000 years ago, Roman aqueducts used the latest physics, construction, and materials engineering developments to carry water from high elevations to locations across the empire. This innovation provided fresh water for agriculture, enabled hydraulic mining and flour mills, and dramatically improved public health. This single invention made city life possible in places far from natural water sources for the first time in human history.
Humanity has been a steady stream of ingenuity since the days of the Romans.
- One hundred years ago, we saw the first ever commercial flight. Today, FedEx generates $84 billion in revenue by delivering 16.5 million packages through its fleet of more than 210,000 vehicles and 700 planes.
- In 1974, a cashier in Troy, Ohio, had the clever idea to put a barcode on a pack of Juicy Fruit gum, transforming inventory management and paving the way for companies such as Walmart and Home Depot.
- This year, a 20-year-old woman received a 3D-printed ear implant made from her own ear cells and shaped to match her other ear, a dramatic advance in tissue engineering that could eventually lead to artificial organs such as lungs or kidneys.
We can’t predict what innovations will transform our world like the Smartphone and which will collect dust like the Segway. But we can rest assured that human ingenuity will continue to shape our world and reward investors. We believe owning a broad universe of stocks is the most effective way to participate in the rewards of ingenuity and innovation, wherever and whenever it takes place.
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What Drives Investment Returns? Start With Ingenuity.