Having started working in asset management thirty-four years ago, I used to pride myself on the fact that I had experienced a variety of financial market conditions, witnessed many economic cycles and seen booms, busts and manias come and go. I have recently been compelled to challenge this notion, which has made me consider that I may actually have been participating in one massively elongated cycle which started in 1980 and possibly ended last year. If the last forty years have been the exception rather than the norm, this will have very significant implications for likely future returns across all sorts of different assets.


  • Returns across a range of financial assets have been exceptionally strong over the last forty years
  • The decline in interest rates from the late eighties until 2021 was arguably a key driver of these returns but the increase in inflation suggests this process has ended
  • A mean reversion of financial assets to their long-run mean could be a strong possibility and this would have very wide-ranging implications
  • Equity investors may require a very different approach to that which succeeded in the last decade


“The last forty years have seen a truly epic environment for financial assets which seems unlikely to be repeated. Reversion to long-run mean is one scenario that investors should consider, particularly because the implications are so far-reaching.”

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