The Capital Markets

CHAPTER 1The Early 21st‐Century Evolution of Global Capital MarketsThe Great Transition Era

Jack Malvey

INTRODUCTION

The pace of economic evolution varies and is told in real time by fluctuating global capital markets. New technologies arrive, displacing old ways. Political frameworks oscillate between centralized and decentralized approaches to economic affairs. Regulators shift between more or less economic and market oversight. Economic policies alternate between stimulus and restraint. Corporate finance trends swing between high and low financial leverage. Healthier, longer‐living people migrate in search of better opportunities. Economies rise and fall. Industries soar and skid. Firms come and go. Institutional and individual investment philosophies adapt to new products like ETFs and revisions in expected return and risk tolerance assumptions. Currencies and commodities climb and descend based on general economic prospects and idiosyncratic market conditions like demand and supply. Changes in market psychology favor some economic and industry groupings over others.

The signs of economic evolution are all around us and often can be seen more clearly through a long‐term lens. Each one of us has a unique, personal, observational journey. Although oblivious at the time, I grew up in a kind of U.S. economics laboratory. At the peak of the Baby Boom years, in the early 1960s, the intersection of three major highways in sprawling suburban Northern New Jersey persuaded developers ...