As part of our work with wealthy families, we frequently discover interesting and relevant content from the financial media. One recent article we think our clients might find particularly thought-provoking is Three Big Things: The Most Important Forces Shaping the World by Morgan Housel from The Collaborative Fund.
The basis of this article comes from the fact “a minority of things drive the majority of outcomes.” As a result, the world is driven by tail events. This concept is particularly true when it comes to investing, where a few positions may result in most of your lifetime returns.
History is no different. World War II, World War I and the Great Depression influenced nearly every important event of the 20thcentury. Industrialization and the Civil War did the same in the 19th. In this article, Housel uncovers and discusses three important forces currently shaping our world that may have a profound impact on the coming decades. These factors include:
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- A demographic shift reconfiguring modern economies.
- Wealth inequality that’s grown for four decades hitting an inevitable breaking point.
- Access to information closing the gaps that used to create a social shield of ignorance.
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Housel explains that all three of these transformational and ubiquitous factors will likely impact everyone in the decades to come in different ways. While no one knows for certain how these factors will truly influence the world, this article does predict some of their potential effects so we can have a better idea of what’s to come.