The United States is approaching a significant milestone: its 250th anniversary. Such a landmark presents an opportune moment to step back and reflect on how the U.S., the world and investing have changed relative to the last time such a notable date was recognized, the bicentennial celebration 50 years ago. The U.S. economy today is larger, more productive and more technologically advanced than at any prior point in its history. And yet the current economic and geopolitical uncertainty embedded in markets sits uneasily alongside that tremendous progress. That tension is worth examining further.
For the better part of a decade at Neuberger, we have used the start of summer in the northern hemisphere as an opportunity to step back and read a book that helps us think about the themes that matter most over the long term. When we turned to Hans Rosling's "Factfulness" as our summer reading in 2019, the central argument of the book was striking: Humanity has made extraordinary progress, though in the present moment we rarely recognize it as such.
By most objective measures, the world in 2026 is measurably better than it was 50 years ago. Average incomes have risen significantly. Extreme poverty has fallen sharply. Access to health care, education and electricity has expanded across populations, while literacy is up significantly.
The U.S. economy has advanced, too. In 1976, the U.S. was navigating severe stagflation, a disruptive energy crisis and the fallout from Watergate and the Vietnam War. It was a challenging period, and the bullish case for U.S. equities was difficult to make. Yet, the subsequent five decades saw strong U.S. economic growth, rising per capita income, declining inflation and rising energy independence. And this period was accompanied by one of the most consequential episodes of capital appreciation in financial history.
The S&P 500 grew from roughly $660 billion in market capitalization to approximately $70 trillion today. None of the Magnificent Seven companies (all with market values today measured in the trillions) existed as publicly investable businesses in 1976—a testament to an entrepreneurial dynamism that has not just generated substantial wealth for investors around the world but also launched breakthrough technologies that have helped transform the global economy.
Three Shifts That Have Reshaped Portfolio Construction Since 1976
An important question for investors as we approach the 250th anniversary of the United States is not how much has changed, but what the changes imply for building investment portfolios. Three major shifts stand out to us.
The first is benchmark composition. An investor tracking the S&P 500 in 1976 was taking on concentrated exposure to energy and cyclical industrial companies. An investor tracking it today is predominantly exposed to technology, including heavy exposures to AI-driven businesses (and growing with the potential inclusion of recent and anticipated IPOs like SpaceX, Anthropic and OpenAI). Passive investing really cannot be thought of as a “default setting” given that the indices themselves have changed; indeed, it is worth noting that passive investing itself barely existed in 1976. The Vanguard Index Fund, launched by John Bogle on August 31 of that same year, raised just $11 million and was dismissed by some as “Bogle's Folly.”1 Today, tens of trillions of dollars are indexed to benchmarks that are themselves the product of active decisions. For investors relying on passive exposure, this kind of structural shift warrants active attention to what the benchmarks represent at any given point.
The second is information and its pricing. In 1976, access to economic and market data was often limited and unevenly distributed, giving some investors an edge. Today, data is broadly available and rapidly priced—markets are faster and more efficient. But this information availability also gives investors a greater array of inputs, and artificial intelligence is amplifying this trend. The edge for active investment managers today lies not in access to information, but in what they do with it.
The third is diversification. Many global stock and bond markets, private equity, private credit and liquid alternatives were either nascent or inaccessible to investors 50 years ago. Today, these investment categories form a meaningful component of sophisticated portfolios, providing return streams and risk profiles that simply did not exist as practical options in 1976. This gives today’s investors another genuine edge—but also requires more sophisticated risk management tools and frameworks.
Fiscal and Geopolitical Headwinds That Still Belong in the Portfolio Conversation
The picture is not uniformly positive. In the U.S., public debt has risen from approximately 30% of GDP to more than 120% over the past 50 years, and the fiscal deficit stands at roughly 6% of GDP compared to just over 4% in 1976.2 Income inequality, by many measures, has increased. Housing affordability has deteriorated. Political polarization, by most metrics, is higher. And after 50 years in which globalization has been a meaningful force for growth, that trend may now be reversing.
These are genuine headwinds, but they are not new phenomena, and they are not unique to the United States. Many developed economies share some version of the same fiscal and political pressures. Nevertheless, they form the backdrop against which investment opportunities and risks must be assessed.
The Enduring Case for Staying Invested
The headwinds we face today are real. But there have always been reasons to step back from risk, and now is no different. The long-term drivers of capital markets are human ingenuity, creativity and productivity, and these translate into economic growth, rising corporate earnings and, ultimately, stock market appreciation and wealth creation. These drivers have a habit of rising above the noise, just as we must look through short-term distractions as investors. With the AI revolution and other technological breakthroughs, advances in productivity and the entrepreneurial dynamism that has defined the U.S. and global economy across the last 50 years of disruption and adaptation, there are genuine reasons to be positive about the next 50 for the U.S. and for the world. As long-term investors, that is justification enough for factful optimism.
What to Watch For
Tuesday 06/30:
- U.K. GDP
- U.S. Chicago Purchasing Managers’ Index
- U.S. JOLTS Job Openings
- U.S. CB Consumer Confidence
Wednesday 07/01:
- Eurozone Consumer Price Index
- U.S. Manufacturing Purchasing Managers’ Index
- U.S. ADP Nonfarm Employment Change
- U.S. ISM Manufacturing Purchasing Managers’ Index
- U.S. ISM Manufacturing Prices
Thursday 07/02:
- U.S. Average Hourly Earnings
- U.S. Initial Jobless Claims
- U.S. Nonfarm Payrolls
- U.S. Unemployment Rate