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Investing at a Crossroads: Three Themes for Today’s New Challenges

As many of the tailwinds of the past 40 years turn to headwinds, what could be the new long-term investment playbook?

The global economy and financial markets have benefitted from several significant tailwinds over the past four decades: Inflation moderated and stabilized; global interest rates declined; geopolitical tensions eased, creating the conditions for the efficiency gains of globalization; labor markets lost pricing power and grew more flexible; corporate tax burdens lifted; natural resource- and fossil fuel-intensive growth raised living standards and generated investment opportunities worldwide. It was a particularly golden era for investors in fixed income securities, technology and other “long-duration” assets.


Many of those tailwinds are now turning to headwinds, and we believe this new economic regime demands a new set of investment strategies.


In our view, portfolios steering into the next 10 – 20 years need to ADAPT TO TODAY’S NEW CHALLENGES of deglobalization, higher taxes and lower returns to capital; MIND THE GAP that has opened up between return targets and the nominal- and real-return outlooks for traditional asset classes; and DIVERSIFY DIFFERENTLY due to rising equity-bond correlations and the renewed importance of inflation as a determinant of financial market risk and return.


In this paper from September 2022, we set out some of our long-term investment ideas designed to meet those three imperatives.

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