Editor's note: If you turn on CNBC or visit any financial-news website, the "gloom and doom" crowd will scare you into selling your stocks and running for the exits in a panic.
But as Dr. David "Doc" Eifrig explains in today's edition of our weekend Masters Series – originally published in the January issue of Doc's Income Intelligence newsletter – he looks past the negative headlines and maintains a bullish outlook on the global economy...
The Long-Term Case for Optimism
By Dr. David Eifrig, editor, Income Intelligence
It doesn't make any sense...
The U.S. economy grew at an annual rate of 5% last quarter, its strongest growth in more than 10 years... More than 3 million jobs were created last year, the best since 1999... And consumer confidence is at a seven-year high.
But investors are anything but happy.
The market has fallen more than 3% from its highs. The Volatility Index (the "VIX"), colloquially known as the "Fear Index," has spiked to more than 20. And yields on high-quality assets, like U.S. and German government bonds, have been driven down as investors flock to safety.
Events with Europe, Russia, oil, and other stories have combined to create a sort of firestorm of negativity. But these are short-term problems...
I take a longer-term view. I try not to obsess over what's happening in the market today... but to think about what kind of world we live in. And focusing on the facts, instead of the fears, gives a much more optimistic view of what's in store for the next few years.
A long view is exactly what income investors need. Scared investors always have some reason, justified or not, to stay out of the markets.
A smart investor knows the growth trend is generally up... And a lot of evidence shows that the coming years will be a bright time for the entire globe.
Even if the issues in today's headlines all turn into their potential worst-case scenarios, it won't be the end of the world or your investments.
It all stems from our long-standing optimistic view of where we are headed...
The Greatest Time in the History of the World
Most people are prone to the Golden Age Fallacy... the feeling that earlier times, often our childhoods, were simpler, safer, and happier.
Today, fundamentalist terrorists threaten violence to Western cultures... ethnic cleansing has devastated African communities... financial markets seem shaky... governments are paralyzed by political gridlock... We could go on.
But the old days weren't any better.
Think about it this way: While many people my age recall the idyllic family life of Leave It to Beaver in the '50s, in reality we practiced hiding under school desks for nuclear air-raid drills.
Right now is likely the best, safest time in the history of the world...
1. We are living in the least violent period in the history of mankind.
When you look at a scale from the Middle Ages to today, or even from the 1950s, the number of people killed by either war or murder has declined at an astounding rate. (For more on this, look up Steven Pinker's book, The Better Angels of Our Nature: Why Violence Has Declined.)
2. There's more democracy and freedom in the world than ever.
The total number of "free countries" in the world – as defined in an exhaustive survey by the nonprofit human rights group Freedom House – has risen from 44 in 1973 to 88 today (or 45% of the countries in the world). The number of "not free" countries has been cut in half.
3. And economic freedom is at an all-time high.
As measured by the Index of Economic Freedom, published by the Heritage Foundation think tank and the Wall Street Journal, the opportunity to provide for yourself – across the globe – has grown consistently for two decades and hit an all-time high in 2014.
The driving features behind all of this freedom and safety are capitalism and strong economies.
People don't fight or invade each other when they've got good jobs and something to lose. Healthy economies lead to reinvestment in communities, health care, and other things that raise the standard of living.
For example, global income per person recently hit an all-time high of $14,397 after adjusting for purchasing power, according to the World Bank. That includes billions of people in Asia, South America, and Africa who have left the struggle of a subsistence existence and built a better life for themselves over the last two decades.
Technology is a major factor... Better communications networks make it easy to collaborate, teach, and learn. Food is cheaper than ever, and so is basic medicine. With the current decline in oil prices, energy is cheaper than it has been in a long time, and progress is being made toward affordable alternative sources of energy as well.
Progress on all of these measures isn't peaking, either. It's accelerating.
Nearly anywhere in the world, if you are an entrepreneur or young worker willing to develop marketable skills, you couldn't have picked a better time to be alive and to be part of a vibrant global economy.
There's Always a Reason Not to Invest
The headline fears about the market – like Russia and Europe – are small change compared with the extraordinary progress the world has made.
For example, are you concerned about all the money that Russia is losing with oil prices so low? Remember, Russia defaulted in 1998, and global markets still powered ahead. (And for the record, Russia is unlikely to default anytime soon. It has more than $400 billion in currency reserves.)
Europe has been struggling for a long time now. It's not just an economic malaise, it's a demographic shift. Even if it undergoes an extended period of stagnation like Japan has, it won't drag down the world economy.
And ask yourself: Has any story in the past seven years given you a good reason to keep out of the market? Hasn't everyone already forgotten Ebola?
The fact is that in 2008, we underwent the worst combination of an economic and financial crisis in modern history. But today, the resilient economy has bounced back to full strength.
Of course, the market is likely to undergo 10%, 20%, or greater corrections when shocks hit. We don't expect that to happen soon, but we know it will happen someday.
We don't need to predict those types of corrections. We just need to remain diversified, take a long-term view, and build a robust and profitable income portfolio.
To do that, we recommend buying income investments when they trade for unquestionably low valuations. From time to time, you're able to scoop up productive assets for prices that can't be passed up.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: This Wednesday, Doc is hosting a free live training event to show an income-generating strategy you could use to make an extra $135,878. If you want to learn how to pocket hundreds of thousands of dollars in additional income retirement, make sure to tune in. Get the full details here.