GM82: The Surprising Success of the U.S. Economy ft. Elroy Dimson & Kiran Ganesh

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May 21, 2025

Elroy Dimson, a finance professor and research director at Cambridge Judge Business School, and Kiran Ganesh, managing director at UBS Global Wealth Management, dive into the surprising resilience of the U.S. economy over the past 25 years. They discuss the significance of diversification amid market volatility, the evolving role of bonds, and the impact of factors like equity risk premium. Their insights also touch on historical downturns and shifting investor sentiment, along with emerging investment strategies that blend traditional assets with newer options like cryptocurrencies.

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ANECDOTE

Kiran's Formative Market Experience

Kiran Ganesh started at UBS immediately after Lehman Brothers collapsed, beginning in equity research.
This experience shaped his understanding of market volatility and client concerns.

INSIGHT

US Market's Unexpected Success

US equity markets have outperformed unexpectedly during the first 25 years of the 21st century.
Earlier predictions underestimated America's continued economic and innovation strength.

INSIGHT

Diversification Against Long Drawdowns

The length of time investors stay underwater varies greatly by country, sometimes up to 70 years.
This unpredictability reinforces the importance of geographic and asset diversification.

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America's recent economic performance has been a surprise, as it's managed to outperform many other markets over the last quarter century. We review the insights from the Global Investment Returns Yearbook, discussing how the US has thrived and what that means for future investment strategies. Our guests, Elroy Dimson and Kiran Ganesh, share their expertise on market trends, the importance of diversification, and the implications of recent economic shifts. We also explore the complexities of factors like equity risk premium and the evolving role of bonds in an investment portfolio. Join us as we explore these themes and consider what’s next for investors in a changing global landscape. You can read the Global Investment Returns Yearbook here.

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Episode TimeStamps:

02:19 - Introduction to Elroy Dimson and Kiran Ganesh

09:21 - What kind of feedback do they get from clients?

13:04 - Stocks for the long run?

17:41 - Is the US losing its grip on its economy?

24:08 - Are indicies becoming more crucial for portfolios?

25:39 - Ranking equity markets according to risk

27:22 - How often should we expect economic collapses?

29:13 - The surprising outcomes of bonds

34:00 - Bonds - are we returning to 1999?

38:31 - Which asset classes are the optimal inflation hedges?

40:47 - Where do most of their returns come from?

41:56 - How they approach the evolving interest rate landscape

43:49 - The state of Bitcoin and alternative assets

49:59 - Key insights to factor investing

54:38 - Is value investing becoming structurally more challenged?

55:48 - Performance expectations in the major asset classes

57:36 - Advice for constructing a solid long term portfolio

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