"Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time. You can't produce a baby in one month by making nine women pregnant."
-Warren Buffett

The challenge

As long-term readers of my work will be aware, I don’t expect GDP to grow at a particularly attractive rate in the years to come, and the reason is simple – adverse demographics. Demographics affect GDP growth in a number of ways but, most importantly, ageing of society will have a profound, and negative, impact on aggregate demand.

As little can be done to affect demographics in the short to medium term, assuming you are looking for robust equity returns, and assuming respectable GDP growth is a necessary condition for solid corporate earnings growth, which again is key to decent equity returns, you are effectively left with two options. You either invest in countries with a relatively benign demographic outlook (and they are few and far between), or you invest in productivity enhancing technologies, as rising productivity is the only way to circumvent the demographic problem.

This is far too comprehensive a topic for one newsletter, so I have taken the executive decision to make this month’s letter the first part of a 2-part letter – how to invest successfully in a low growth environment.


This topic is a classic example why we had to roll out ARP+. Regulations prevent me from being as explicit as I would like to be in this forum, and that is where ARP+ enters the frame. For what I believe is a very reasonable amount of money, I can be much more overt when discussing the opportunity set there.

If you are still considering subscribing, I can inform you that the topic in this month’s and next month’s Absolute Return Letters will be followed up by a research paper on the same topic. I am planning for that to be published in November, but it will only be available to subscribers of ARP+.

Furthermore, we have just released a megatrend paper on disruption on ARP+. That paper goes hand in hand with the topic discussed this month.