Far and Away

Monday, June 17th, 2013

Sitting on the couch with my daughter Caroline the other day, we stumbled
across the movie Far and Away starring a very young Tom Cruise and Nicole

Without getting into too much of the plot, it depicts mid 1800s Irish immigrants coming to America and their experiences of landing and working in Boston, and culminating with them claiming “land” in Oklahoma!

As we observed how primitive life was, including riding around in horse and buggy, and washing their clothes using a bar of soap, I pointed out to Caroline that this took place during the life of the grandfather of my grandfather!

In other words, not very long ago, but VERY long ago from her perspective given today’s technological advances and modern conveniences.

Being a history nut, this led to a great dinner table discussion, and later, a little research on my part to illustrate the incredible progress that has taken place during my lifetime.

I thought I’d share a few of the key points I uncovered with you:

  • The computer embedded in the iPhone 5 is a million times smaller, a million times cheaper, and a thousand times more powerful than the huge IBM mainframe computer in use in 1967, the year I was born. Doing the math, that’s about a billion-fold increase in computing power per dollar in my lifetime! Yes, that’s billion-fold with a B.
  • In World War II, the Allies burned seven billion barrels of oil; six billion coming from the U.S. By 1973, and then 1979, OPEC doubled and tripled the price of oil and Americans sat in gas lines. Today, thanks to horizontal drilling and hydraulic fracturing, America is estimated to become the largest oil producing nation again by 2020 (a mere 7 years from now). For those of us old enough to remember those gas lines back in the 70s, this is one spectacular development and so far beyond what we ever could have imagined would become possible in our lifetimes.
  • In the first few years of my life, outside of North America, Europe, and Japan, the rest of the world was relatively inconsequential from an economic standpoint. Today, China, India, Brazil, South Korea, Indonesia, and Mexico are growth engines of the world. In 2004, General Motors sold ten cars in the U.S. for every one it sold in China. This year, that ratio is projected to be one to one! Translation: there’s significant growth going on outside of our borders which is lifting millions of people out of poverty throughout the world.
  • In the month of my birth, February, 1967, the value of the 500 largest and correspondingly best managed companies, i.e. the S&P 500, was 87. At the end of May, 2013, it was valued at 1,631, just shy of a 19 times increase in value! For comparison, the Consumer Price Index rose 7 times over the same timeframe. With dividends compounded, that’s growth of approximately 9.6% per year during my lifetime. All of this in spite of wars, recessions, bear markets, natural disasters, assassinations, financial crises, a presidential impeachment, oil embargos, and catastrophic terrorism.
  • And, the best for last: During the 70 or so year lifespan of a Relaxing Retirement member, Gross Domestic Product has increased about SIX-fold. In other words, the value of goods and services produced by EACH American, after taking inflation into affect, is six times greater. Stop and think about that for a moment. Six times more productive. Just imagine what that ratio would be if I was able to trace it back to the mid 1800s as depicted in the movie Far and Away!

So, why am I sharing all of this?

Well, it seems to me, that, for the most part, most of us live day to day and news story to news story (i.e. one reported crisis to the next).

Yet, through it all, the world doesn’t seem to end! Whenever we’re going through a crisis that seems to be without historical context, such as 9/11, or the global financial collapse of 2008-2009, it’s just human to fear that we’ve arrived that the end of financial life as we’ve known it.

However, in spite of all that, amazing progress continues.

Until we take a step back and really examine and contrast how far we’ve come, we remain very insulated and we lack the well justified confidence we should experience.

As I uncovered, and gave more significant thought to these and other realities, my level of appreciation and outlook for the future grew immensely.

Yes, there are still significant problems and challenges in the world. And, there always will be.

But that can’t mask the fact that amazing level of progress has taken place which has improved the lives of millions of people throughout the world.

And, there’s so much more to come!

When you contrast where we are today vs. only 150 years ago, as illustrated in the movie Far and Away, you can’t help but have an enormous sense of confidence about the future.