How to Invest for A Hundred Years | Inigo Fraser Jenkins

Inigo Fraser Jenkins argues that investors should revisit assumptions formed during the post-1980 period of benign inflation and negative stock-bond correlation, as well as the postwar U.S.-led rules-based order. He says financial theories are not universal laws, and views the positive stock-bond correlation since 2022 as a return toward a pattern that prevailed through much of the prior 200 years, potentially amid inflation shocks from climate, deglobalization, or debt-monetization risk.

Inigo Fraser Jenkins says inflation is a more relevant long-run benchmark for investors funding real needs such as retirement, education, and health care, and notes a gradual shift from defined-benefit to defined-contribution pensions alongside greater concern for real assets. He argues that long-horizon portfolios and risk measures should focus on the ability to earn returns above inflation and avoid real losses.

Inigo Fraser Jenkins distinguishes nominal bonds, whose returns are set in nominal terms, from equities, which he describes as broadly real assets because companies can pass inflation through prices and dividends. He says that over 20-year holding periods stocks and bonds have roughly equal relative volatility, while beyond a few business cycles bonds have a greater probability of real loss than equities.

The guest warns that inflation can erode wealth over long periods, while Inigo Fraser Jenkins says the strong real returns and benign inflation of the 20 years before COVID may have lulled investors into a false sense of security. He contrasts that experience with the more turbulent returns often seen outside the late-19th-century Pax Britannica period, when low-risk assets could deliver long-run positive real returns.