In 1899, if you had asked any serious investor which country had the world’s largest stock market, they would not have said the United States.

They would have said Britain.

The London Stock Exchange represented about 25% of total global market capitalisation. The US was second, at around 15%. The British Empire was at its peak, and London was the undisputed financial capital of the world.

Fast forward to today, and Britain’s share of global markets has fallen to about 4%.

What happened? 

The world moved on. New industries emerged. New economies took the lead. The composition of global markets changed completely.

Every era has its dominant market. Every dominant market eventually stops being dominant. 

Britain was the world’s largest market for most of the 19th century. Japan was the world’s largest market as recently as 1989. Today, it is America.

This does not mean America will fall. It means we should understand exactly why it rose, because that is what will tell us how durable that position is.