3 Investing Principles And Why They Signal International Markets for 2026 | 19 Feb 2026 | RBA
The Three Core Investing Principles
The report grounds its outlook in three "tried and true" principles that dictate long-term market performance:
- Earnings Growth as the Driver: It is the growth of earnings, rather than the absolute level, that dictates equity performance.
- Capital Scarcity: Return on Invested Capital (ROIC) is historically highest in areas where capital is scarce.
- Cycle Rotation: Market winners from the previous cycle are rarely the leaders in the next.
Executive Thesis
- Core investing principles suggest international equities are positioned to lead in 2026
- Market leadership may rotate away from prior U.S. mega-cap dominance
- Earnings momentum, capital scarcity, and macro regime change are the key drivers
Principle 1: Earnings Growth Drives Returns (Not Earnings Levels)
References
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