Lessons from the last 40 years for the next 20


In place of my usual Crystal Ball looking at the year ahead, I want to take a longer perspective and think about the lessons we can take from the last 40 years. The period from the end of the 1973/74 bear market, through the Great Financial Crisis to the present day, encompassed not only widely different market conditions but also a period of rapid development in the asset management business. It also happens to span my career in the City. As I reflect on this extraordinary period (or is it?), I do believe there are a number of lasting lessons we should take on board to help guide us through the next twenty years.


  • During this time there have been many completely unforecastable events and developments. How should we respond to the unexpected?
  • There have also been developments we could foresee with reasonable certainty. How should we respond to those?
  • Time and time again we are reminded of the obvious. The best predictor of future returns is the price we pay for an asset! How can we control our many natural behavioral biases so that we do actually buy low and sell high?
  • Our understanding of risk has developed a great deal. Volatility is not in my view the best measure of risk. Indeed volatility can present opportunity. Importantly volatility presents different issues for different types of investors.
  • We are often guilty of making things too simple, and at other times too complex! It is important to understand the difference. Time weighted returns are simple but can often mislead us, and regulation has a nasty habit of producing complex unintended consequences that drive us to be pro-cyclical. We had all better understand that.
  • Finally, as an industry we can organize ourselves better. There is a great opportunity for those who are ready and willing to grab it, whether as an asset owner, asset manager or consultant. We can deliver better outcomes.

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The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.