Benjamin Felix

I've been saying the same thing for a long time now with US valuations being so high, just saying the expected return on the US market must be lower based on where valuations are.

But as you said, returns up until recently continued to be higher than expectations would have suggested.

You have data in one of the yearbooks comparing the performance of railway stocks from, I want to say, 1900.

I don't know.

I don't remember the timeline now.

You show in the yearbook that the market capitalization of railway stocks decreased from being massive to being tiny, but the returns outpaced all of those other sectors and the market as a whole.

That's just mind-blowing stuff.

I love that one.

Has the railway analysis held up since you first did it?

You had another chart in one of the yearbooks comparing developed market returns to emerging market returns.

The fact that emerging markets underperformed to me was just mind-blowing the first time that I read the analysis.

The reason that I think it's related to this question is because emerging markets tend to have high economic growth.

Can you talk about the historical relationship between a country's economic growth and its stock returns?

We talked a lot about that analysis and about Japan in a past episode.

And one of the comments that I made was that it's kind of like a reverse lottery.

You might expect higher returns from emerging markets, but you have these occasional big events where one country just gets completely wiped out.

And that causes the long-term record for emerging markets not to be so great, even if the expected return based on something like valuations is high.

Definitely a tough period.

We do have a bit of a value tilt in our portfolios, which has been not as good as a growth tilt over the last, I don't know, 10 or so years, although recently a little better.

Yeah, yeah.