Every long-term investor should study this chart closely. It tells the story of nearly a century of shifting economic regimes and suggests that another major turn may be underway.
The chart from Bank of America Global Research shows real assets (commodities, real estate, and collectibles) relative to financial assets (large-cap equities and long-term bonds) since 1925. The message is clear: real assets are now near their lowest relative valuation in nearly 100 years.
Historically, such extremes have marked turning points. The Great Depression, the end of Bretton Woods, and the inflationary 1970s all saw periods when real assets surged after being deeply undervalued. Each shift corresponded to a broader change in macro conditions, from disinflation to inflation, from financial engineering to tangible value creation.
After four decades dominated by falling interest rates, globalization, and technological efficiency, financial assets have vastly outperformed. But those tailwinds are fading. Rising geopolitical risk, deglobalization, fiscal expansion, and resource scarcity all tilt the balance back toward the physical and finite.
If history rhymes, the next cycle may favour commodities, infrastructure, and other real assets — sectors long dismissed as “old economy” but now central to a world rebuilding supply chains and national resilience.
