It’s been a great 30 years for
Research
magazine. But what do the next 30 hold? And what do 2038 capital markets look like? Hard to know, unless someone’s taken a time machine forward and back with first-hand experience. The best I could do was
ponder
likelihoods for you.
Thirty years out, which stock category will have been the world market leader? Actually, they will have all ended up pretty close to each other. I say that because over very long past periods all major categories, correctly calculated, have had pretty similar returns within about a 2 percent annual bandwidth.
In the future that will probably continue being true for both countries and sectors.
Nothing changes about fundamental economics — equity prices are determined, always and everywhere, by supply and demand. When one category gets hot, demand increases and prices rise. Firms cash in by issuing more stock or doing
IPOs
. Eventually, supply swamps demand and prices fall. This repeats over and over again, country- and sector-wise, until over long periods there’s just not much return difference. During the next 30 years, categories will bounce around wildly, but betting on a single country or sector for the whole period doesn’t get you superior results over time — just a different ride.
In 2008, folks fussed that emerging markets were “decoupling” from developed ones.
Nonsense.
The world continues more correlated than people fathom and will get ever more so by 2038. The long-term performance spread between developed nations has been ever tighter and will continue tightening, tied to technology and globalization.
Speaking of technology, in 2038 laptops and cell phones are gone — too bulky. Teenagers don’t text anymore — passé! Instead, everyone will wear a tiny wireless earpiece linked to a voice-activated, credit-card-thin wallet-computer. It responds to your voice uniquely as your laptop, phone, address book, garage-door opener, TV remote, heart pacemaker, car key, alarm clock, credit card itself, and even controls your garden sprinkling system.
Of course, older people can’t hear well or see the text on those darn tiny credit-card computers, so working with 9,000 mega-
googolbytes
of memory and extra loud sound, holographic images will be projected anywhere you like via amplifiers and large screen monitors. Street monitors will be more common than phone booths were in 1990.