What do railroads in 1900 and tech giants in 2025 have in common? They both shaped markets—and remind us how much things can change.
The UBS Global Investment Returns Yearbook 2025 uses 125 years of history to show why diversification, discipline and a long-term mindset pay off.
The UBS Yearbook, published in collaboration with academics from London Business School and Cambridge University, doesn’t try to forecast the future. But it gives fascinating historical context for making better decisions today.
Global diversification pays off in 2025
One of the central messages of the 2025 Yearbook is the importance of diversification—a theme we highlight often in our blogs and podcasts. Our strategy of being globally invested paid off so far in 2025, as U.S. stock markets have faced much more volatility than equities in other countries.
As of April 30, 2025:
- The U.S. total market was down 9.2% year-to-date and off 14.2% from its February peak.
- Meanwhile, Canada’ s S&P/TSX Composite Index was up 1.4%.
- International developed market equities gained 7.2%.
- Emerging market equities were flat at 0.1%.
(See our PWL Market Statistics page for additional data.)
10 insights for successful investing
While U.S. equities outperformed during the past 15 years, many investors questioned the value of being globally diversified. This year, we saw the benefit. Diversification may not always pay off handsomely in the short term, but over a longer horizon, the evidence shows it works.
That perspective is reinforced by the UBS Yearbook’s 10 key insights for successful investing drawn from 125 years of market history.
- Markets constantly change
Railroads dominated equities at the start of the 1900s, accounting for 63% of the U.S. stock market. Many of today’s largest industries—energy (except for coal), technology and healthcare—were almost totally absent in 1900.
The lesson: Nobody knows the stock market winners of the future—so don’t try to chase them. As Warren Buffett says in his Fourth Law of Motion, “For investors as a whole, returns decrease as motion increases.”
- Equities have strongly outperformed
Since 1900, U.S. equities have returned 9.7% annually, far outpacing bonds (4.6%) and T-Bills (3.4%). Meanwhile, inflation was 2.9% per year.
- Real bond returns were modest
Government bonds have offered low returns after inflation over the long term. Their annualized real return was just 0.9%, according to data from 21 markets since 1900. Bonds were more volatile than T-Bills (13.2% standard deviation versus 7.5%), but less than equities (23.0%).
- Equities don’t offer a smooth ride
Equities, as we know, are volatile. That’s why we expect to get a higher return than investing in safer assets.
The U.S. equity real return was 8.5% on average, but this included six years with annual returns below negative 40%. There were also six years with gains over 40%. Volatility is the price of admission for these higher returns.
- Patience was rewarded
Major bear markets—like the tech crash or the 2008 financial crisis—can last years. It takes patience to stay the course. In the four great U.S. equity bear markets since 1900, stocks lost from 52% to 79% peak-to-trough. The recoveries to pre-crash levels took 5.3 to 15.5 years.
- Diversification across asset classes helps
Stocks and bonds have a low long-term correlation—just 0.19 in the U.S. This means owning both is a good way to reduce portolio risk. Keep in mind, however, that over shorter timeframes, this correlation can increase or decrease. We should always be mindful of the longer-term perspective.
- Diversification within equities also matters
Globally diversified portfolios have generated higher risk-adjusted returns over the past 50 years than investing in only domestic assets in the vast majority of countries. International diversification works!
- Inflation impacts real returns
While equities beat inflation over time, they don’ t always hedge it well. Returns tend to be strongest when inflation is low and stable.
- Gold and commodities can hedge inflation—but with limits
While these assets can help, it’s difficult to find products that are retail investor-friendly. Institutional investors may get benefits from adding this asset class.
- Factor investing has worked—but requires patience
Size, value, profitability and other factors have outperformed over longer horizons. Still, performance varies across cycles, and some styles can lag for years.
How to sum up all these insights? I think the message is that diversification and discipline are key to investing success. While diversified portfolios may lag at times, they help manage risk and are rewarded over time. This includes owning broadly diversified funds to ensure we own the winning stocks of tomorrow.
Equity investors earn a premium because they’re willing to withstand volatility and drawdowns. It’s easier to stay disciplined if you have a long-term focus and a well-crafted portfolio that aligns with your risk tolerance and personal goals. As investment manager Ben Carlson recently wrote, “You can more easily lean into the pain when you know what you’re buying, holding and why.”
Success in investing doesn’t come from market timing, stock picking or being swayed by the trend of the day. As 125 years of data show, long-term thinking is what matters.
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Read more commentary and insights on personal finance and investing in our past blog posts, eBooks and podcast on the website of PWL Capital’s Parkyn-Doyon La Rochelle team and on our Capital Topics website.
