🧨The United States of relentless optimism

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I’ve been reflecting a lot on our country over the past few days while gorging on grilled meats and basking in the hot, humid sunshine.

And while there are reasons to feel uneasy about everything going on these days, I’ve found myself focusing on the opposite this year.

America – despite all of its flaws – has become the financial, economic and cultural powerhouse of the world.

You can see this all around you, no matter if you’re a market nerd or an average Joe or Jane. The United States accounts for 25% of the world's economy and 43% of its stock market with just 4% of the population.

Travel anywhere, and you’ll likely be able to find someone with an iPhone in their hands, Jordans on their feet and Taylor Swift on repeat.

For 248 years now, we’ve done the most as a nation through a bold, risky experiment called capitalism. And now, America’s hard and soft power is undeniable.

To me, this is the strongest argument for believing – and investing – in the future of our nation.

If you know me well, you’d understand that I’m usually the party pooper in my social circles.

I like to have fun, but I’m also the one passing out the sunscreen, watching the Google maps route, and reminding people that it’s almost midnight so dear god let’s just order the Uber home already.

Some people are risk-takers, adrenaline junkies, perpetual optimists.

In most scenarios, I am not.

Risk appetite is a funny thing, though. You may not be up for skydiving, but you’ll forego paying for health insurance to save some money. You tried the ghost pepper hot sauce, but you can’t stomach an oyster. Your perception of risk often comes from a tangled web of your age, condition, experiences, and values. It’s not some dial that’s stuck on a particular number.

And Americans are a gutsy bunch. I mean, we all risk our fingers setting off explosives in celebration of our great nation every year. 

But when it comes to the US stock market, we’re a little more hesitant to light the fuse. 

Americans who take part in the Conference Board’s monthly consumer survey – one of the most highly regarded studies on how Americans feel about the economy – are regularly pessimistic. Since the survey started in 1987, there’s been just one month in which over half of respondents thought stocks would rise over the following year. On average, 65% of people surveyed thought stocks would drop.

Ask a group of strangers on the street to draw you a chart of how the US stock market has performed over the past several decades, and I bet at least a handful of them would draw a straight line down. 

Yet if you look at our stock market over decades, it’s not a story of doom and gloom.

Instead, it’s an empowering tale of collective human adaptability. 

Since 1950, the S&P 500 has gone through 33 drops of 10% or more, through countless wars, humanitarian crises, financial crises, and a global pandemic. Yet over that time, the S&P 500 has returned 8% per year on average, turning $1 into $317.

Factor in inflation, and $1 invested back then is still worth about $24.

Oh, and contrary to what Americans have told the Conference Board, the S&P 500 has risen 80% of the time over 12-month periods going back to 1987.

You can theorize about the stock market’s success – or the rampant pessimism surrounding it – for hours. But I actually think it’s pretty simple.

Cycles of joy and pain have been the heartbeat of the US stock market for decades. Humans innovate, businesses adapt, profits rise, shares increase. Then, a crisis hits. We react, we mourn, and then we rebuild.

America has been at the forefront of all of these cycles.

Why? Because ingenuity is in our DNA, and our free markets are the most efficient at turning ideas into progress.

COVID was the latest iteration of this. The world was engulfed by a serious pandemic, and the US economy effectively shut down for weeks. The S&P 500 dropped 34% in a month. We all thought the world was ending.

Yet innovation surged. Businesses adapted, technology evolved, and vaccines were developed at record speed. The stock market rebounded in response. Now, both the S&P 500 and company profits are more than 50% higher than where they were before the pandemic began.

I’ve never set off a firework in my life. And I’d be lying if I said I wasn’t nervous about the future.

But I am a relentless optimist when it comes to investing in America’s prospects, even when the headlines are disheartening and the outlook seems bleak.

You should be, too.

By the way, my colleague Ben Carlson wrote a fantastic post about why he’s also bullish on America. Read it here.

Thanks for reading!

Callie

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