I have not read the book yet, but the promo sounds about right.
Almost everybody in the U.S. is mentally stuck in the 1990’s. Tens of millions of Americans are waiting for the resumption of our financial leadership, dominance, and economic growth. In fact, they’re betting everything on it. We’re talking countless trillions of dollars. This is money people have been counting on to keep them comfortable when they’re too old to work, money they’re planning to use to educate their children and grandchildren, money they hope to use to start or build a business.
They think they’re being conservative and prudent, but the life savings they’ve invested in companies, funds and assets are really just bets on the normally powerful growth of the U.S. economy. It sounds like a good bet, right? They’re making it because it’s always worked - or so they think! The bet produced timely results in the eighties and nineties, and for Investor 1.0, that means it always has and it always will.
But the bet has not always worked for people who need results within ten or twenty years. Frankly, my work shows the U.S. recovering a little for the near future, which will feel pretty good, but then I see our economy and stock market stagnating for a long, long time – maybe the rest of my life. So, if you’re an amateur, you’re asking yourself, “Is Dan right about this?” And that is exactly the wrong question. You aren’t going to make yourself rich by seeking a fortune teller. If you or I could really tell the future, don’t you think we’d both be trillionaires by now?
The real questions you should be asking – the questions Investor 2.0 asks - are these:
“What are the chances that some other countries, whose leaders were educated in the best U.S. universities, will change their rules to be more business-friendly and attract the capital and resources that used to flow into the U.S. ten years ago? Fifty-fifty maybe?
“What about taxing risk-takers and rewarding poorly performing, less efficient businesses? What are the chances that those policies could contribute to some stagnation? Fifty-fifty?
“What are the chances that the decisions our country is making right now, combined with the aging baby boom population, will limit growth in the U.S.?” Fifty-fifty, do you think?
“And what about the fact that baby boomers, who were the engine of progress for the past generation, are getting older and considering moving themselves out to pasture? Does it matter that the baby boomers are now being replaced by a much smaller and less hungry population of their children, while other countries are now demonstrating the courage, creativity and ingenuity that we showed when we were hungry? What are the chances of this demographic change impacting growth in the U.S. economy, compared to other economies over the next decade? Fifty-fifty?”
So now let me ask you this: Are you in the habit of calculating the risks and likely rewards when you bet your life savings on something… or do you think you should just act on some easy combination of habit, emotion, wishful thinking and impulse? If you take the mindless route, it is because you are (or up to now you have been), Investor 1.0. It’s time for a change.
*Excerpts from “A World without Borders” by Dan Frishberg