Report reminds that hot tech doesn’t equate with bubbles

At a time when investors debate the wisdom of investing in artificial intelligence (AI), a much-cited annual report issued yesterday (3 March) issues a timely reminder: while investors often associate hot new technologies with bubbles and periods of subsequent underperformance, long-term market trends show that new technologies do not always generate bubbles and bubbles do not necessarily imply weak long-term returns.

The report on markets over a 126-year period (1900 through 2025) issued by UBS shows that railroads (which represented a staggering 63% of the US stock market in 1900 compared to just 1% today) have outperformed both the overall US stock market and newer technology competitors since 1900. Similarly, despite a bubble that peaked in 2000 with the dot-com crash, technology has also not been a poor investment. 

Tech investments have outperformed over the past 3 decades 

“An investor in technology over the last 29 years has enjoyed an annualised return of 14.1% versus 10.0% for the US market,” says a summary of the Global Investment Returns Yearbook 2026. “Holders of the tech sector would still be beating the US market even if they were unlucky enough to have initiated their investment in March 2000”, when the dot-com crash began, triggering a huge sell-off on the tech-heavy NASDAQ Index. 

The Yearbook was issued by UBS Investment Bank and UBS Global Wealth Management’s Chief Investment Office, in partnership with Professor Paul Marsh and Dr Mike Staunton of London Business School and Professor Elroy Dimson, Chairman of the Centre for Endowment Asset Management (CEAM) at Cambridge Judge Business School. 

Investors don’t persistently err in the same direction 

“Our conclusion is that investors should shun neither new nor old industries,” says the Yearbook. “There can be times when stock prices in new industries reflect overenthusiasm about growth, and times when investors become too pessimistic about declining industries. However, it is dangerous to assume that investors persistently make errors in the same direction: they may at times underestimate the value of new technologies and misjudge the survival prospects of moribund industries.” 

The Yearbook contains many other facts and figures about markets over the past century and a quarter, including a finding that since 1900 equities have outperformed bonds, bills and inflation across all countries with continuous investment histories. Over the same period, developed markets have delivered higher annualised equity returns (8.5%) than emerging markets (6.9%), although emerging markets have edged developed markets during the period 1960 to 2025, returning 10.9% per year compared to 9.6% per year.