Stocks are still king for long-term investing, Deutsche Bank says

Core Insights - Historical data indicates that equities have provided real returns of 4.9% per year over the past 200 years, outperforming traditional portfolios and other asset classes like government bonds and gold [1] - Investors have been rewarded for taking risks in equities and bonds, but starting valuations are crucial for long-term performance [2] Performance by Valuation - Portfolios constructed from low-valuation stocks have outperformed high-valuation stocks by nearly 9 percentage points annually over the past 70 years [3] - The US market has recently delivered exceptional returns despite high valuations, which is noted as an exception rather than the norm historically [4] Economic Growth and Returns - Nominal GDP growth, which combines real growth and inflation, is identified as the long-term anchor for asset returns, with global GDP growing at an average of 5.7% per year over the last century [4] - Sweden and the US have led in equity performance, achieving annual returns of 7.5% and 7.2% respectively [4] Challenges Ahead - Italy has shown the weakest long-term equity performance at just 2.5% annual real returns due to political instability and slow economic growth [5] - Global GDP growth is declining, with nominal GDP in developed markets dropping to levels not seen since the 19th century, leading to the lowest 25-year real equity returns in advanced economies in over a century by the end of 2024 [5] - Slower population growth and weak productivity gains may hinder future economic performance, with projections indicating declines in the working-age population in 32 countries by 2050 [6]