A Multipolar World : Riding the Bull in Commodities and Technology.
Embrace Scarcity, Cultivate Creativity.
Choosing optimism might appear less intellectually sophisticated. Wars, debt crises, geopolitical rivalries, inflationary episodes, the Cold War, and the looming specter of nuclear annihilation characterized the era spanning from 1935 to 1970, epitomizing a multipolar world in geopolitical disarray. The fall of certain autocracies, the ascent of others, the reimagining of democracies, substantial societal shifts, and a world teeming with opportunities marked this period. It presented an extraordinary occasion for strategic stock investments, offering valuable insights into potential trajectories for the S&P 500 in the forthcoming decade.
In a multipolar world, this period serves as a template for investing in our time. While immense geopolitical challenges exist, such as Saudi Arabia-Israel vs Iran, US vs China, Europe vs Russia, and potential disruptions in the supply chains, we are also in a configuration where there are incentives to create and renew our production model.
Optimism, often disparaged as mere salesmanship, stands in stark contrast to the perceived wisdom of pessimism. Conversations about hyperinflation, dollar crises, or war may project an air of intellectual gravitas, yet they often foster inaction and fear. Nevertheless, within the realm of optimism, we find the impetus to explore, elevate our opportunities, and embark on an unceasing journey of learning. To be optimistic doesn't entail disregarding the myriad challenges; rather, it signifies a call to innovate and craft solutions. In essence, optimism transcends mere mindset, evolving into a strategic force propelling us relentlessly toward progress.
In Tali Sharot's 'Optimism Bias,' she argues that the optimism bias shields us from acutely perceiving future challenges, thereby reducing stress and anxiety. Simultaneously, it broadens our perspective on life's possibilities, fostering improvements in both physical and mental well-being while amplifying motivation for decisive action and heightened productivity.
Despite existing risks, it was an excellent time to invest in stocks and commodities, albeit a challenging period for fixed income. In a multipolar world, the key is to invest in what is scarce and productive while avoiding, at all costs, the most abundant: debt.
Thanks for reading,
Guillermo Valencia A
January 11th, 2024
Co-founder of Macrowise , a Research Company.