Progress

Good Morning Relaxing Retirement Member,

In our world of minute by minute news flashes across our TVs, computers, radios, and smart devices, it’s easy to get distracted and lose track of the incredible level of progress going on.

The United States, and the entire world, have never been, and never will be, perfect. There are always challenges and misfortunes to focus on which have a tendency to reduce our confidence.

Our level of confidence goes down because we all tend to measure “how things are” vs. some ideal we have in our minds, or one that has been drilled into us by some entity with an axe to grind.

I learned long ago how critically important it is to measure “how things are” based on the progress that has been made, and not based on some ideal.

Given this, I thought it would be a good idea to share some various progress stories that I’ve come across that I found to be fascinating and uplifting.

I believe you will too…

Energy

The energy industry in the United States is in the midst of an extraordinary transformation, and the changes may have the potential to redefine America’s economic future.

The turnaround in U.S. oil production is sometimes referred to as the “shale gale” because it stems from the ability to reach previously inaccessible oil that was locked in shale that couldn’t be cracked.

Now, because of the relatively new drilling technology, the amount of accessible oil in the U.S. is far greater than believed just a few years ago.

By 2020, the International Energy Agency estimates the U.S. will displace Saudi Arabia as the world’s biggest producer, pumping 11.6 million barrels per day.

The surge is mostly due to innovations in horizontal drilling and hydraulic fracturing, which involves pumping water, chemicals and sand at high pressures to break apart underground rock formations.

The process is called “fracking” and has raised a variety of environmental concerns that are still at issue.

The increased production has set in motion a chain of events that would have been hard to imagine even a few years ago, including an end to U.S. energy dependency on foreign oil.

Composites

Jet planes aren’t what they used to be. Technological advances have transformed aircraft, making them lighter and more fuel efficient. What’s more, the ride is quieter and smoother.

That’s partly because planes are now made of composites, a lightweight concoction of carbon fiber and epoxy that can be molded into different shapes and sizes.

The composite is lighter than metal but just as strong. Composites were 1% of a plane in 1969, but now represent about half the material used in the Boeing 787.

Thanks to composites and more efficient engines, fuel consumption has been cut by 20%.

The global airline industry fuel bill is expected to total $214 billion in 2013, or 33% of operating expenses, the International Air Travel Transport Association reports.

Airlines are looking at all opportunities to reduce costs, and many of the new aircraft will replace older, less efficient airplanes, potentially reducing the cost of air travel.

Biogenics

Biotechnology drugs, or biologics can be composed of sugars, proteins, or nucleic acids, or a combination of all of them. Some are living entities, cells, and tissues from humans, animals, or microorganisms.

Biologics are used to treat maladies ranging from rheumatoid arthritis to breast cancer, and they have been found to successfully slow the progression or cure the condition outright.

That outcome has resulted in a remarkable track record for biologics. Among the top selling prescription drugs in 2013, seven of eight were biologics!

Global Demand

Much of the demand for cars and planes now comes from emerging markets. China and India are leading the advance, but countries in Latin America and Africa also have a growing consumer class.

How big is the new wave of global consumers? Researchers at the McKinsey Global Institute estimate that by 2025 there will be about 4.2 billion in what demographers call the consuming class, or those with disposable income. That’s nearly double the number in 2010.

In 2010, the emerging markets accounted for $12 trillion in spending. In 2025, they are expected to account for about $30 trillion, or half of global spending.

Dividends

Steady dividends over a long period of time often indicate a profitable, well managed company.

S&P 500 companies paid out a record $311.8 billion in dividends last year, a 10.8% increase over last year.

S&P 500 companies increased dividend payments again in the first half of 2014. 420 of the 500 companies have paid dividends, the most since 1998.

In 2013, the information technology sector accounted for 15.4% of the S&P 500 dividends, the largest contribution.

In 2013, there were 631 companies located outside the U.S. with a dividend yield of at least 3% of their share price. Inside the U.S., there were only 99.

Over the past 15 years, dividends have accounted for about 30% of the compound annual growth for the MSCI Emerging Markets Index.

This is certainly one indicator and reason why owning shares in diversified companies domiciled outside the United States is a must.

Committed To Your Relaxing Retirement,

Jack Phelps

The Retirement Coach

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