The End Of The Equity ‘Super Cycles’

The End Of The Equity ‘Super Cycles’

Earlier this week, while documenting yet another sobering, if not totally depressing, outlook piece suggesting returns for US equities are likely to be lackluster over the next decade, I briefly mentioned Goldman's characterization of the post-World War II investment landscape as a story of "three long 'super cycles.'" The bank's Peter Oppenheimer contends we're currently at the end of the third super cycle and that going forward, a trio of factors together argue for lower returns on the index.
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7 thoughts on “The End Of The Equity ‘Super Cycles’

  1. What the Goldman chart suggests to me is that sharp drawdowns in markets are needed to set the table (so to speak) for the next leg up. By refusing to countenance such a drawdown post-GFC, the Fed and other CBs would seem to be guaranteeing the low-return environment many analysts are warning about.

    1. Precisely and they cannot allow the sharp drawdown because the system is too fragile to handle them. As we saw in the GFC moves down result in losses far higher than the values of the original assets. We cannot raise rates until we make our systems more robust and we cannot do that save by policy choices which we refuse to make because keeping the fragility maximizes profits next quarter. We insist that we be hoisted by our own petards.

      1. “As we saw in the GFC moves down result in losses far higher than the values of the original assets” — which is why Buffett called derivatives “financial weapons of mass destruction.”

  2. Entering a fourth (decades long) super cycle.

    Increasing automation, robotics, clean/abundant energy (fusion), screens, supercomputers, blockchain, etc. will all decrease the need for human workers. Manufacturing will be less dependent on China, as we replace human workers with automation. Human beings will be more interested in entertaining themselves than having a family. A decrease in human population will help with cleaning up the Earth.

    This will be a stock picker’s playground.

    1. The population reduction won’t go fast enough. The Earth, IMHO, is beyond redemption already. While we might actually slow down the climate “rot,” the problem has already exceeded the point of no return and even slower growth will only continue the problem at a slower rate. Decreasing the need for workers is not a solution to anything. People who don’t work don’t buy anything. Economic growth becomes permanently negative. It’s possible my grandson (now 12) could live out the current century, though frankly I don’t think there will be much to see at that point.

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