We have, over the last couple of years, sought to forge partnerships with like-minded firms, allowing us to bring invaluable expertise to all our clients in connected areas. Whilst we await your responses to the forthcoming survey, we are delighted to announce a partnership providing all our clients with access to the services of one of the country’s leading independent general insurance brokers.

Following a period of mutual due diligence and trials, we are delighted to have concluded a preferred partner arrangement with Beaumonts Insurance Brokers.  This will provide first class, fee based general insurance and their services will be introduced to you in more detail at your next annual review and in subsequent newsletters.  Of course you don’t have to wait until your next review if you have general insurances (personal, motor, commercial, business, for example) due for renewal.  Simply pick up the phone to your adviser here at Manse and we can put you in touch with the relevant person, happy in the knowledge that the service you receive will meet the highest of standards.

We are also delighted to welcome former Chief Executive of the Skipton Building Society, John Goodfellow, to Manse Capital as Adviser to the Board.   John’s lengthy experience and understanding of the financial services world will undoubtedly help us develop our services and ensure we remain ahead of the game.  As one of less than 20 firms in the UK that are both Accredited (by the Institute of Financial Planning) and Chartered (by the Chartered Insurance Institute), we are rightly proud of our achievements to date but know that we cannot rest on our laurels. If we are to remain at the forefront of what we do we must have the right people working with us.

Welcome also to our newest member of staff Jack Dawson.  Jack joins us as a Client Relationship Manager, as he begins what we expect will be a long and successful career in Wealth Management.  For those of you thinking ‘where do I know that name from?’, if you have seen the film Titanic, Jack Dawson is the lovestruck stowaway played by Leonardo DiCaprio.  Welcome to Manse Jack!

The post We`ve Been Listening To You appeared first on Manse Capital.

Main Proposals

• The proposals recommend that the existing award system is replaced by a new system that provides a greater emphasis on local awards rather than National awards.
• Local awards will be made on an annual basis and will be worth up to £35,000 as a one off lump sum and will be awarded to a maximum of 25% of Consultants.
• National Awards will be awarded on a five year maximum basis (negotiated case by case) and will be worth up to £40,000 per annum and will be restricted to a maximum of 10% of Consultants.
• For the highest achieving Consultants it will be possible to hold both local and national awards simultaneously.
• The new awards will NOT be pensionable so will not help participants increase the values of their NHS pensions in retirement, tax free cash lump sums and death in service benefits pre and post retirement.
• The scheme recommends that after a period of consultation existing Consultants are moved across to the new scheme as quickly as possible.
• The proposals recognise that existing benefits have been accrued in pension terms as a result of the old scheme being pensionable and it is not the intention of the new scheme to remove or compromise those benefits accrued to date. Although how this will ultimately work is not yet clear. It is possible that the number of years service at the higher level of benefit accrual (due to the current awards being pensionable) will be calculated and then added to the new years service at the lower pensionable income once the Consultant has moved to the new scheme. However this is yet to be confirmed.
• The scheme also recommends that the first 5 points on the Consultants payscale remain unchanged but beyond that (currently £83,839 – £100,446) pay increases will be based not automatically on the length of service but on achievement.

Below is a diagram showing the proposed structure of the new awards scheme but if you need any further help or comment on how these changes may affect you personally please do not hesitate to get in touch. If you would like Manse Capital to present a seminar to your department on this subject and the changes to pension legislation (annual and lifetime allowances) please get in touch and we would be happy to oblige.

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There has been more examination joy for Michelle, Emma, Alex, Sarah and Pav recently and everyone is committed to further success throughout the year.

We really do believe that Financial Planning can be an exciting profession of the future. Sadly the ‘industry’ of financial advice does not have a great reputation and sometimes justifiably so. But there have been many great things done for many happy clients. That is why we have been evangelical about doing financial planning the right way, with a view to creating a ‘profession’, so that when young people are considering a career after ‘A’ Levels, they will look to study for a Financial Planning degree.

There are now a handful of Universities providing full time degree study for Financial Planning. Sarah and I recently attended an open day and networking event at the internationally renowned Bradford University School of Management at which we were able to meet some of the students of the course. Click here to find out more about the course.

These are some very gifted, talented and highly personable young people, and we both came away excited by the calibre of the next generation for the profession. We may be looking to provide summer or sandwich year employment to one of the undergraduates.

We do understand that life and industry experience is important for our work, however we are also fully wedded to the principle that qualification is a good signifier of how we can better fulfil our fiduciary responsibilities to our clients.

As you may know, Manse Capital is one of the few firms in the UK to be both an Accredited Firm of the Institute of Financial Planning (IFP) and a Chartered Firm of the CII. This further demonstrates our commitment to the profession.

Great news for us all here today, as Pav has returned to us after an horrific car accident. We are delighted to see her back and on the mend.

The post Staff News appeared first on Manse Capital.

Many in retirement are reliant to various degrees upon the interest they receive on cash they hold on deposit to maintain their lifestyle. Although most express concern about the poor interest rates on their bank and building society deposits, as many see themselves as being risk averse, they avoid placing some of these monies in other investments with a view to securing a better return, as they fear losing some or all of their money.

Our experience strongly indicates, the most risk averse amongst us inadvertently often take greater risk than more risk accepting investors, in their quest to avoid risk. To better explain this point, here are two examples;

When the Northern Rock got into difficulty, account holders were concerned about the security of their money and started to queue to take their money out, despite the guarantees afforded by the Financial Services Compensation Scheme to protect them in just such an event. To quell the concerns and stem the panic, the Government of the day extended that guarantee to cover unlimited monies held at the Northern Rock ‘only’. Despite this, account holders still took their money out, only to place it in other banks and building societies where there was less protection for their money! It was an understandable but irrational action, driven by fear and being ill informed which led many into further problems, when other banks and building societies got into difficulty in the ensuing months.

The Halifax produced a research paper analysing 50 years of savings patterns and rates from 1959 to 2009. Over that period, the average gross interest rate on no notice accounts was 6.45%. Yet after deducting inflation, the real rate of annual return was 0.57%! If we assume a deduction of the current basic rate of 20% tax applied throughout, then we would need to deduct 1.29% from the gross interest rate, which means that after the effects of inflation and basic rate tax, the real net return over the 50 years would have been -0.72%. If we were to apply that principle looking forward for the next 30 years, then an initial deposit of £100,000 would be worth £80,568 in real terms and that is before you have drawn any income from it.

What of the current situation? The average Retail Prices Inflation from 2008 to the end of 2012 was 3.14% compound. Even if we extend the timeline to 10, 15 or even 20 years, it has been of the order of 3%. Currently, for larger deposits with long term fixed rates, you may secure circa 3.5%[1] before tax or 2.8% net of basic rate tax. As for no notice accounts, you may be able to secure up to 2.25%[2] before tax.

Sadly it is an inalienable fact it is not possible to avoid risk, the important issues are to manage what risks we expose ourselves to and how we mitigate all of those risks, including the following;

• losing some or all of your capital
• the effect of inflation progressively eroding the buying power of your money
• the additional strain your income requirements place upon the money
• how paying unwarranted tax reduces your money still further
• risks associated with trying to second guess an ever changing world
• holding more money with one banking institution than would be protected in the event of its failure
• the impact of fluctuating exchange rates on cash or investments you hold abroad

Given the above problems and their complex interaction, how do we effectively address these problems? Each individual’s circumstances is different and specific advice should be sought but in general terms, it is prudent to keep as cash deposits, those funds targeted to be spent on capital projects in the next 5 years, such as home improvements and new car purchases. In addition, it is also prudent to have as cash, an agreed sum as an emergency pot, in event of the unforeseen. Although it is likely this money is going to secure a net of tax interest rate of less than inflation, it does help ensure that you are not forced to sell other assets at a time when the market may be suppressed. Beyond that, the next step is to establish how much income, (if any), you need your capital to provide you with. Dial back in the allowance for inflation and we know what return we need to secure for you if you do not want your capital to reduce in value in real terms and thus the degree of ‘capital risk’ we need to take.

Having done all of the above, we manage the various risks, by ensuring you are not over exposed in any area, by spreading your money broadly across different asset classes, with different institutions in a low cost easy to manage and tax efficient manner.  When your monies are spread correctly across cash, government and institutional bonds, commercial property, and shares, their behaviour tends to differ from one another at any given time and set of circumstances. Thus the extremes of highs and lows they may experience tend to cancel each other out and your money as a whole, gets a smoother return and has the opportunity to achieve the increased return you need over and above what you could secure in a bank or building society account.

Please remember, the value of your investment and the income from it can go down as well as up and isn’t guaranteed. You may get back less than the value of the money that you invest.

The post Making your Money Work Harder Whilst Reducing The Risks You Take appeared first on Manse Capital.

In a recent sample survey of some of you, we were somewhat surprised to find you weren’t entirely sure how you pay us.  This is particularly pertinent since January 1^st was the long awaited date on which the ‘Retail Distribution Review (RDR)’ was finally implemented.

One of the issues that the RDR has changed is the way advisers must agree and declare remuneration, and has effectively scrapped the old product based commission system for investment advice.  It is no longer acceptable for an adviser to hide the amount they earn from a product provider in the small print.  We have been applying this RDR requirement for over a decade, meaning that this aspect of RDR has little impact on our relationship.

The other major change under the new RDR legislation is that an Adviser has to declare to the client whether or not they offer a ‘restricted’ advice and/or product service or an ‘independent’ advice and/or product service. As with the old rules, an independent adviser has the freedom to advise and recommend products from any source that they feel are within the client’s interests, whereas a ‘restricted’ adviser is limited to the services and products from a panel of providers that the company they work for has deemed to be both suitable and profitable.  Due to the increased compliance, qualification requirements and oversight costs of remaining independent, many firms have chosen to alleviate this burden by becoming restricted rather than staying independent.  Coutts, Towry and St James Place, along with most of the high street banks are some of the more well known names to follow the restricted advice path. We can confirm to you that this is not a road that we intend to travel and are remaining independent, as we believe passionately that having an independent status is in your best interests.

The majority of you have funds invested via our preferred ‘Wrap Provider’, Transact.  Transact is effectively an administration shell that allows us, as your planners, to invest in the best funds to meet your needs in a cost effective and user friendly manner.  So whether you have pensions, ISA’s, general funds etc, we can apply your specific asset allocation effectively across your longer term funds.  Transact is not an investment manager.  We generally charge a fee of 1% of your invested assets, (subject to discounts for large portfolios).    In return for this fee, we manage not only your portfolio’s, but more importantly, your wider financial plan, including cashflow forecasting, research and reporting, administration, cash accessibility, income streams and estate and tax planning.  In short, your fee pays us to help you live the life you want with peace of mind, control and mitigation of the various risks that you may face. You don’t have to look far to see the sometimes disastrous consequences of indisciplined and random investing, and an uncoordinated approach to dealing with one’s affairs. If you are in any doubt about how this process works, please give your planner a call.

On a lighter note, you may want to read about Orlando the Cat beating professionals and students at stockpicking . We like this story very much!

Click here to read the article in full.

The post How The Retail Distribution Review Affects You. appeared first on Manse Capital.

Tuning out the noise is even harder when it is amplified by an investment industry thriving on complexity and confusion, while frequently shunning simple yet effective solutions. After all, the most lucrative products to sell are often the ones in which investors don’t really know what they are getting or how much it costs’

For more than a decade, I have had the privilege of hearing many colleagues discuss the fundamentals of investing in simple and effective ways. Everyone puts their own words and music to this set of ideas, but the following are what I consider the top ten greatest hits, with a few of my own verses added to the mix. Greatest hits aren’t new, by definition; therefore, this article merely aims to chronicle and arrange them in a storytelling sequence, where one connects to the next, rather than in order of importance or priority. Trends change and fads come and go, but investing is like music in that true classics stand the test of time and remain relevant long after they were initially composed.

1) Conventional Thinking

Consider the questions people ask upon learning you are a financial advisor. “What stock should I buy?” is a common response. They want to know if you can help them discover the next Apple. Another frequent request is, “Where do you think the market is going?” They want to know if now is a good time to be invested in the market, or if they should bail out of stocks instead. If you have no answer, then surely you know a hot money manager or can identify the next Peter Lynch for them.

All these questions share something in common—you are being asked to make a forecast! Therefore, conventional thinking seems to be that, in order to have a successful investment experience, you must look into your crystal ball and predict the future.

2) Market Forces

There is a completely different approach that all investors should at least be aware of, and it wasn’t developed by the big banks and brokerage firms on Wall Street. It originated and evolved in the halls of academia and is based on a mountain of evidence showing that free markets work because the price system is a powerful mechanism for communicating information

Simply, prices are fair. Competition among profit-seeking investors causes prices to change very quickly in response to new information, and neither the buyer nor the seller of a publicly traded security has a systematic advantage. Therefore, the current price is our best estimate of fair value.

3) Just My Opinion

Despite the strength of market forces, many investors may never lose the urge to form an opinion about the future, or to ask their advisor for one. However, if you choose to offer your outlook for the future, it should be followed by a reminder that you don’t make investment decisions based on an opinion—yours or anyone else’s. If the compulsion to act on an opinion is too difficult for your investors to resist, ask them if it is conceivable that they are the only one with the information upon which their opinion is based. If the answer is no and the information is widely known, then why wouldn’t it already be reflected in prices? For example, the claim that “everyone knows interest rates are going up” should be met with the fundamental premise that if the statement were literally true, rates would have already gone up! The logic behind how markets work is a formidable response to any forecast of the future.

 4) Man vs. the Market

Not only is this logic formidable, but the evidence supporting it is also compelling. If free markets fail, it would be easy for investors to systematically beat the market, but in reality, man versus the market isn’t a fair fight and most of us should accept market forces rather than resist them. There is a large literature devoted to analyzing the results of professional money managers. It dates back over four decades to the original study of its kind conducted by Michael Jensen in 1968. The experiments have been repeated many times with better models applied to larger and more reliable data, but the results continue to confirm the original conclusions. As you’d expect, some managers are able to beat the market on a risk-adjusted basis, but no more than you would expect by chance.

Furthermore, it must be the case that, in aggregate, investors earn market returns before fees. This doesn’t just hold over the long run, but at every instant due to the adding up constraint. The market reflects the collective holdings of all investors, so the value-weighted average investment experience must be the market return minus fees and expenses. This is not just a theory; it is a universal unconditioned truth relying solely on simple arithmetic.

This arithmetic leads many investors to think that, since money managers aren’t like children from Lake Wobegon (who are all above average), a winning investment strategy attempts to identify above-average managers and avoid all the others. But can you systematically identify in advance managers who will outperform the market after adjusting for the risks they took? Although it is hard to imagine there aren’t skillful managers, the challenge facing investors is that true skill is hard to distinguish from pure luck.

This doesn’t mean professional money managers are stupid! There are undoubtedly many smart ones who take their job very seriously and work hard to get the best results they can for their clients. But the market is hard to beat because there are so many smart managers—and not in spite of it. If you take the world’s greatest bass fisherman to a dry a lake, he won’t catch any fish. He’s still the world’s greatest bass fisherman, but that’s beside the point if there isn’t anything to catch.

5) Everyone Can Win

It is not necessary for someone to have a lousy investment experience for you to have a successful one. Everyone can win because with capitalism there is always a positive expected return on capital. The expected return is there for the taking, and as a provider of capital, you are entitled to earn it. That doesn’t mean it’s guaranteed to be positive, but only that it is always expected to be positive.

6) Excellent vs. Unexcellent

But stocks and bonds don’t all have the same expected return. Conventional wisdom says that if you want better returns, you must uncover the limited number of truly outstanding companies. In other words, the stocks and bonds of these “excellent” companies, based on their superior fundamental measures (e.g., return on assets, earnings to price, etc.), should have a higher expected return than the stocks and bonds of “unexcellent” ones. While this implies an “excellent” company should pay a higher interest rate if it borrows money, intuition suggests that lenders will assess the strength and relative riskiness of borrowers and charge the riskier unexcellent ones higher rates. The same concept should apply in the stock market.

The market is a closed system where there must be a buyer for every seller and an owner for every stock and bond. There are no orphaned securities! It is mathematically impossible for investors to collectively limit their holdings to the stocks or bonds of excellent companies, so the riskier companies must offer an incentive for investors to buy (or continue to hold) their stocks or bonds over those of a safer company. The incentive comes in the form of higher expected returns. The market is not fooled, but rather, rationally pays a higher price for—and accepts a lower expected return from—the stocks and bonds of excellent companies, and vice versa. Therefore, the unexcellent company has what is referred to as a higher cost of capital, which is equivalent to the investor’s expected return.²

7) Effective Diversification

However, not all risks generate higher expected returns. Markets only compensate investors for risks that are “systematic” and cannot be eliminated. For example, the Green Bay Packers (forgive the American sporting analogy here) won’t pay Aaron Rodgers more money to play football without a helmet. It is a risk that can easily be avoided if he puts on his helmet and buckles up the chin strap! Similarly, investors shouldn’t expect an additional reward for taking the risk of concentrating their portfolio in a few securities, industries, or countries because the increased risk of doing so is easily eliminated through effective diversification.

To diversify effectively, investors allocate capital across multiple asset classes around the globe to suit their unique circumstances, financial goals, and risk preferences. Ineffective diversification, on the other hand, includes concentrating a portfolio in a few securities, diversifying by broker, or dividing up assets among money managers in an uncoordinated way that does not eliminate risks they shouldn’t expect compensation for bearing.

8) More Than a Map

Travelling the road to a successful investment experience requires more than just a map. Building a portfolio that puts these ideas to work is one thing, but staying on route is something else altogether. Keeping your hands on the wheel and your eyes on the final destination requires the emotional discipline to execute faithfully in the face of conflicting messages from the media and the investment industry.

Investors are bombarded with information designed to lead them off course and toward more conventional means that involve excessive trading, higher costs, and frequent detours based on the latest prognostication from talking heads or so-called gurus.

The simple message to let capitalism be your guru quickly becomes stale and completely lost among the attention-grabbing headlines of the day. A constant reminder that the media is in the entertainment industry and their objective is not to give sound advice but to attract an audience may help tune out the noise.

Tuning out the noise is even harder when it is amplified by an investment industry thriving on complexity and confusion, while frequently shunning simple yet effective solutions. After all, the most lucrative products to sell are often the ones in which investors don’t really know what they are getting or how much it costs.

 9) Behaving Badly

Investors ought to periodically review their plan and stick to it if the approach is still the right one. But adhering to a prudent investment strategy often becomes elusive in a world of continually streaming news and complex investment products. These forces can overwhelm human emotion and lead many investors astray.

A vast amount of research into how the human brain is wired documents tendencies known as behavioral biases. These biases make even highly intelligent investors particularly susceptible to the conventional approach of Wall Street and the messages purveyed by the media. An entire field of study known as behavioral finance, a mix of economics and psychology, has discovered biases that influence investment decisions. They have technical names like overconfidence, mental accounting, regret avoidance, extrapolation, and self attribution bias. What do they all mean? In a nutshell, investors may not be rational, but they are normal—meaning they’re often their own worst enemy.

10) Simple but Not Easy

A prudent investment approach following these fundamentals is like a steady diet of healthy food—simple, effective, boring, and difficult to maintain. It is well documented that good food, exercise, avoiding too much alcohol, and sufficient sleep will improve the odds of being healthier. It is also well documented that accepting that markets work, avoiding stock picking and market timing, effectively diversifying a portfolio, and paying attention to costs will improve the odds of being wealthier. It sounds simple, but it isn’t easy.

……………..and finally

The directors and staff of Manse Capital would like to wish all our clients and families a very happy Christmas and a prosperous and healthy New Year.

The post Top 10 Investment Factors appeared first on Manse Capital.

We are delighted to share with you our new website at www.mansecapital.com and would encourage all our clients to have a look and maybe let us know what you think.  The site contains details of staff old and new, an informative short video, news articles and more about our philosophy and beliefs, in a style that we hope reflects the quality of what we do.

Over the summer, we have been joined by Jenny, Pav and Gill (Fabretti) and you might like to click on their photos to find out more about them.Sadly, Rebecca has returned home to Canada and though we stay in touch, we do miss her around the office.  Good luck Rebecca!

During the last 6 months we have also become one of only 12 financial planning firms in the UK to become both Chartered and Accredited and we hope this reflects the quality of what we do.

The post Company News appeared first on Manse Capital.

The Directors and team at Manse Capital are committed to providing the highest standard of financial advice possible. As a firm we take very seriously the requirements of the FSA, in particular the requirement to treat our customers fairly. We strive to do this in all that we do.

We undertake that all of our actions will be guided by the principle that the interests of our customers are paramount. Our systems and procedures are designed to place our customers at the heart of our business.

In our dealings with you can expect:

• We will be open and transparent in the way we deal with you;
• We will not place our interests before yours;
• We will communicate clearly and without the use of jargon;
• We will inform you of our charges before undertaking any work for you;
• We will deal with any complaints promptly and fairly.
• As examples of how the principles and guidelines mentioned above work in practice in our business we set out below details of what you can expect from us in various areas of our business.

When we give you advice

• We will only recommend suitable investments and other products after finding out sufficient information about your circumstances to be able to advise you properly.
• Our advice will be guided only by what is best for you, our clients.
• We will set out in writing and in clear concise terms why we have recommended any particular investment or product.
• We will inform you in advance of our charges and how these should be paid. If any commission is paid because you invest in any product or investment then we will tell you how much this is.
• In the event that there is any conflict of interest between us and you we will tell you about this as soon as we can after becoming aware of this.
• We will keep comprehensive records of our dealings with you and will record your attitude to risk.
• Where appropriate, and where agreed between us, we will monitor your investments and other financial products and contact you to let you know how they are doing.

When we deal with you

• When you contact us you can expect that we will be polite and courteous.
• All of our staff are trained in dealing with our customers and in treating them fairly.
• When we write to you, we will be clear and straightforward; we will try not to use jargon and technical terms. We will be happy to discuss or clarify any matter.
• We will remunerate and incentivise our staff in ways which encourage them to deal with our clients fairly and impartially and to continually find ways to improve our service.
• You can expect that all of our staff are trained properly for their roles. All of our advisory staff are qualified financial advisors and are fully trained in respect of the investments and products they advise on.

When things go wrong

•  If you complain about any aspect of our service then you can expect that your complaint will be dealt with professionally, impartially and in accordance with the rules laid down by our regulator, the Financial Services Authority (FSA).
• We are insured as required by the rules laid down by the FSA.
• We will provide details of our complaints policies and procedures on request.

We hope that you find using our services a pleasant and straightforward experience.
We always welcome comments and observations about the way we deal with our clients and would encourage you to contact us if you have any comments on the way we deal with you.

The post Treating You Fairly appeared first on Manse Capital.

Manse Capital Gears Up For The Future

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It’s a piece of wisdom worth recalling after another year that has tested the nerve of many investors and prompted questions about what current generations have done to deserve to live in such a tempestuous stage of history.

As the year winds down (if that’s the word for it!), financial markets are gripped by uncertainty over developments in the Eurozone crisis. Each day brings fresh headlines that send investors scrambling from virtual despair to tentative optimism.

While not seeking to downplay the very real anxiety generated by these events, particularly in relation to their effects on investment portfolios, it’s worth reflecting critically on our often second-hand memories of the “good old days”.

A Brief History of the 20th Century

Nearly 100 years ago, Europe was engulfed by a war that destroyed two centuries-old empires, redrew the map of the continent and left more than 15 million people dead and another 20 million wounded. The economic effects were significant, with widespread rationing in many countries, labour shortages and massive government borrowing.

Just as the Great War was ending, the world was struck by a deadly pandemic — the Spanish flu — that killed some 50 million people on the most conservative estimate. About a third of the world’s population was infected over a two-year period.

A little over a decade after the Great War and the pandemic, the Great Depression cut a swathe through the global economy. Industrial production collapsed, international trade broke down, unemployment tripled or quadrupled in some cases and deflation made already groaning debt burdens even larger.

In the meantime, resentment was growing in Germany over its Great War reparations to the Allied powers. Berlin resorted to printing money to pay its debts, which in turn led to hyper-inflation. At one point, one US dollar converted to four trillion marks.

In a new militaristic and nationalist climate, fascist regimes arose in Germany, Italy and Spain. Under Hitler, Germany defied international treaties and began annexing surrounding regions in Austria, Czechoslovakia before finally attacking Poland in 1939.

This led to the Second World War, a conflict that engulfed almost the entire globe as Japan pushed its imperial ambitions in Asia, while Germany sought to conquer Europe. More than 50 million died in the ensuring conflict, including a holocaust of six million Jews. The war ended with the invasion of Berlin by Russian and Western forces, while Japan surrendered only after the US dropped nuclear bombs on two cities, killing a quarter of a million civilians.

In economic terms, the war’s impact was profound. Most of Europe’s infrastructure was destroyed, millions of people were left homeless, much of the United Kingdom’s urban areas were devastated, labour shortages were rife and rationing was prevalent.

While the 35 years after World War II were seen as a golden age in comparison, the geopolitical situation remained fraught as the nuclear armed superpowers, the Soviet Union and the USA, eyed each other. The breakdown of the old European empires and growing east-west tensions led the US and its allies into wars in Korea and Vietnam.

The cost of the Vietnam and Cold Wars created enormous balance of payments and inflation pressures for the US and led in 1971 to the end of the post-WWII Bretton Woods system of international monetary management. The US dollar came off the gold standard and the world gradually moved to a system of floating exchange rates.

In the mid-1970s, the depreciation of the value of the US dollar and the breakdown of the monetary system combined with war in the Middle East to encourage major oil producers to quadruple oil prices. Stock markets collapsed and stagflation — a combination of rising inflation alongside rising unemployment — gripped many countries.

While the 1980s and 1990s were a relative oasis of calm — aided by the end of the Cold War — there still was no shortage of bad news, including the Balkan wars, the Rwandan genocide and recessions in the early part of both decades.

In the past decade, there have been the tragedies of 9/11, the 2004 Asian tsunami, the 2011 Japanese earthquake, tsunami and nuclear crisis and, now, the financial crisis sparked by irresponsible lending, complex derivatives and excessive leverage.

Another Perspective

So from this potted history, it seems fairly clear that tragedy and uncertainty will always be with us. But the important point to take out of it is that previous generations have stared down and overcome far greater obstacles than we face today. And while it is easy to focus on the bad news, we mustn’t overlook the good either.

Alongside the wars, depressions and natural disasters of the past century, there were some notable achievements for humanity — like women’s suffrage, the development of antibiotics, civil rights, economic liberalisation and the spread of prosperity and democracy, space travel and advances in our understanding of the natural world and enormous advances in telecommunication. (Oh, and the Beatles.)

Today, while the US and Europe are gripped by tough economic times, much of the developing world is thriving. Populous nations such as China and India are emerging as prosperous nations with large middle classes. And smaller, poorer economies are making advances too.

The United Nations in the year 2000 adopted a Millennium Declaration that set specific targets for ending extreme poverty, reducing child mortality and raising education and environmental standards by 2015. In East Asia, the majority of 21 targets have already been met or are expected to be met by the deadline. In Africa, about half the targets are on track, including those for poverty and hunger.

Alongside these gains, new communications technology is improving our understanding of different cultures and increasing tolerance across borders, while providing new avenues for the spread of ideas in education, health care, technology and business.

Through forums such as the G20 and APEC, international cooperation is increasing in the field of trade, addressing climate change and lifting the ability of the developing world to more fully participate in the global economy.

Rising levels of education and health and workforce participation also mean the foundations are being built for a healthier and peaceful global economy, dependent not on debt, fancy derivatives and fast profits but on sustainable, long-term wealth building.

Anxiety over recent market developments is completely understandable and it is quite human to feel concerned at events in Europe. But amid all the bad news, it is also clear that the world is changing in positive ways that provide plenty of cause for hope and, at the very least, gratitude for what we already have. These are ideas to keep in mind when we scan the news and long for the “good old days”.

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