Update No. 33 – 13/11/11

A fall in our asset value this week can be attributed to a fall in the value of one of our thinly traded stocks on very thin volumes, which will most likely correct itself next week.

Another quick note on the OWS (Occupy Wall Street) protests and one of my favourite subjects – perspective.  I stumbled across this article a couple of weeks ago, which redefines ‘the 1%’ in terms of global inequality.  I then found the same sentiments basically plagiarised here.  I would suggest almost all of those people protesting how hard they have it may just be surprised to find that they are in fact part of ‘the 1%’, when the net is cast globally, you need only earn US$34,000 to find yourself in this category, I’m there – I hope you are too.  How many of the OWS protestors would like to see their taxation change (increase) in order to make the conditions of ‘the 99%’ globally more equitable?  Just reminds us that we tend to look at things through the prism of what we know. Perhaps (see below) we can wait on the improvements that have been steadily happening over time to continue the great equalisation…

When considering global living conditions, a fact that passed last week, which may have gone unnoticed by many was the arrival on our planet of the 7 billionth living human.  Statistically this occurred on 31 October 2011, although these things are obviously hard to get exactly right, but it bears considering.  The obvious concern (at least to me) is how well as a global average, all these additional people are living.  I thought this article from Felix Salmon made for interesting reading on the subject.  I think this article draws attention to something very important that probably goes unconsidered – the power of industrialisation, capitalism and (relatively) free trade globally to improve lives.  The statistics in the article (which by the way are adjusted for purchasing power – this is important) suggest that the proportion of the world’s population living in absolute poverty (less than $1.25 per day, adjusted for inflation) has declined from about 84% in 1804 to about 12.7% today.  There are actually less people living in absolute poverty today than there were 200 years ago and we have 7 times as many humans on the planet – that is extraordinary.  Obviously, crossing the line from absolute poverty to poverty, whilst very good for those achieving the transition, still leaves an enormous gap to living in conditions you or I would consider tolerable, but the trend is obvious and in time it would seem possible that really abject poverty will be virtually eliminated if we continue to innovate and improve.

Despite 99% of people globally earning less than US$34,000, it is very plainly evident that living conditions have improved inexorably for the last 200 years, and are likely to continue to improve substantially further.  When we think about how hard we have it, it pays to bear this in mind, were you transported back in time 200 years, you could be assured that you would not live nearly as well as you do now.

Malthusian thinking from more than 200 years ago indicated this massive human disaster, driven by over-population should have occurred by now.  Bear in mind when Thomas Malthus made his predictions, the population of the world was less than 1 billion people.  Given that it is now over 7 billion, he was obviously mistaken.  I think the only error he really made was underestimating the ingénue of humans.  At some point not long after Malthus made his predictions, human productivity, particularly in the field of agricultural productivity took off in a way that no-one had (or likely could have) anticipated.  You would be a fool to bet against human industry I think, there are still enormous tracts of land in countries like Ukraine, which evidently possesses some of the most fertile black-soil in the world – that have never been farmed using modern techniques.  You would be courageous to nominate a point at which a Malthusian disaster will occur, I certainly don’t expect to see one in my lifetime, I doubt my children will see one – Tony Hansen 13/11/11.

EGP Fund No. 1 Pty Ltd. Down by 8.6%, lagging the benchmark by 4.01% since July 1^st. Since inception, EGP Fund No. 1 Pty Ltd is Down by 0.93%, leading the benchmark by 8.35% all-time (April 1^st 2011).

EGP 20.  The EGP20 index is Down by 7.88%, lagging the benchmark by 3.29% since July 1^st.  Since inception the EGP20 is Down by 18.59%, lagging the benchmark by 10.17% all-time (since April 1^st 2011).

S&PASX200TR  The benchmark index is Down by 4.59% since July 1^st. The benchmark is Down 8.42% all-time (since April 1^st 2011).