Anyone who invests in shares follows – whether consciously or unconsciously – a fundamentally optimistic world view.

At its core, there is nothing else behind investing in shares than the belief that the companies of this world will continue to grow in the future and that their owners, i.e. the shareholders, will benefit from it.

Dennis Kremer

Editor in the “Value” section of the Frankfurter Allgemeine Sunday newspaper.

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The latter has worked extraordinarily well over the past few decades.

If you look at the performance of important stock market barometers from 1988 to the present day, you can see that America's most important stock market, the S&P 500, has increased fifteenfold since then.

The Dax (in the internationally more comparable version without dividends) has quintupled and the global stock index MSCI World has increased sixfold.

But if you take a closer look, you will also notice that the index curves have recently pointed significantly downwards.

Which always happens, of course.

But that was the big exception, at least in this millennium.

If you take the S&P 500 as an example, it shows that after the crash of internet stocks around the turn of the millennium, it only fell deep into the red in the year of the financial crisis in 2008.

Otherwise, it almost always remained positive over the year or ended a year slightly negative, but then quickly recovered.

With other stock market barometers, some things were different in detail.

But the trend was similar.

In 2022, however, there is no sign of good performance.

The S&P 500 ended the first six months the worst in 50 years with a loss of more than 20 percent.

And the Dax is not happy either: June was the worst month the index has ever had in its history with a minus of eleven percent.

Correction or new stock market era?

Are the financial markets experiencing a normal correction that is inevitably part of the usual ups and downs in prices?

Or are we at the beginning of a new stock market era in which investors have to reckon with permanently lower returns?

So do shareholders, who are notorious optimists, have to be a little more pessimistic in the future?

It is in the nature of things that no one knows this 100 percent.

But there's no shortage of thoughtful remarks, all pointing in one direction.

The star investor Mohamed El-Erian, chief economic adviser to the Allianz insurance group, says: "Lower returns on securities are not predetermined, but certainly possible", especially if inflation remains high.

Joachim Fels, chief economist at the fund company PIMCO, puts it more precisely: “The initial valuations and our anticipation of a more volatile macroeconomic environment require low and realistic long-term expectations for the returns on assets.” A team led by Peter Oppenheimer, chief equity strategist at the investment bank Goldman, finds the clearest words Sachs. In one study, they write:

The Consequences of Deglobalization

Declaring a new cycle right away is bold, especially when it comes from a bank that has been badly off with its forecasts at one point or another in the past.

But the considerations of the Goldman strategists deserve a closer look, because they tie the break between yesterday and today to a decisive economic change that hardly any public company can avoid in the long term: we are talking about the decline in globalization.

It is obvious that globalization, i.e. the close networking of the world economy, benefits listed companies.

They can sell their goods anywhere in the world and find cheap labor anywhere in the world.

If you look at the past decades, globalization continued to increase for a long time: the Berlin Wall fell, the countries of Eastern Europe integrated into world trade, and emerging countries such as India in 1995 and China in 2001 joined the World Trade Organization.

It seemed as if globalization had triumphed.

At the same time, share prices rose.