Factfulness by Hans Rosling - How you can spot better opportunities by better understanding the world
Global health professional Hans Rosling died in 2017, but before he died he left the last piece of his legacy, the book Factfulness, which was one of the best we've read this year. His main argument was that we need to look at the world more thoroughly and instead of falling for simple conclusions about how to solve problems, we should step above the marketing ploys and use well framed data to better understand the world. We should use good information to ensure we are leaving the world better than we found it.
Two main points are useful to the investment audience we serve here at TulipScreener.
1) 4 levels of global income (in United States Dollars)
- Level 0 - < $2 per day
- Level 1 - $2 per day
- Level 2 - $8 - $15 per day
- Level 3 - $16 - $31 per day
- Level 4 - $32+ per day
Only 1 billion of 7 billion people are on level 1 or lower, so on levels 2 and 3 exist 5 billion people who are quickly getting rich (and people at these levels can exist in many different countries, including what are popularly considered "rich countries"). Most companies in "rich" countries are focused on the richest 1 billion on level 4 in Europe, North America, and off the coast of China but are missing out on the biggest expansion of consumers located in Asia and Africa over the coming century (and this is already happening today!)
2) Investment return comes from taking risk where the need is greatest but there is the least competition.
Pension funds and index funds are piling cash into "safe" places and companies whose products you see in the supermarket but these companies operate in slow growing "rich" countries where companies are not hurting for cash. The best return on investment won't be in Apple or Tesla, but in companies that don't get a lot of popular media attention or investors but have great plans and opportunities for the cash you give them.
Factfulness gives a global view on why we can be optimistic (or as Hans said, "possibilist") about how things have improved if we look at many metrics of well being, health, and poverty from a global perspective. We can also use this information to give us the push to step outside the old, comfortable places to put capital (Europe, US, and China) and search for companies that will fulfill the wishes of the next billion consumers to move to Level 4, far away from where we live.
Read the book and think about putting your caital in places that will make good use of it. We can better use our hard earned money to invest in companies that make life better for people far away from where we call home.