Viktor Shvets: The end of cycles and the cost of progress

Livewire Live has always been about ideas that challenge the way we think about markets. In 2025, no one embodied that more than Viktor Shvets. As the keynote speaker, Viktor drew a full house - and for good reason. For more than four decades, he’s been one of the sharpest and most independent thinkers in global finance.

From his early days unravelling Adelaide Steamship in the 1990s to his current role as a strategist with Macquarie in New York, Viktor has never been afraid to call it as he sees it. His career spans continents, asset classes, and regimes – from the collapse of the Soviet Union, to the rise of Asia, to the financialisation of the global economy. Along the way, he’s developed a reputation for piercing analysis and a willingness to go where consensus won’t.

This conversation was recorded on the sidelines of Livewire Live. Over coffee at the Art Gallery of NSW, we dug into Viktor’s big themes: why the old rules of cycles and mean reversion no longer apply, why financial markets now operate in a “cloud of finance” detached from the real economy, and why inequality and politics might prove the biggest drivers of risk ahead.

Viktor’s views can make you uneasy. He argues we live in the easiest time in history to become a billionaire, and at the same time, the easiest to slip into poverty. He warns that political “insanity premiums” could derail markets more than any Lehman-style crisis. And yet, he also makes the case for why risk assets can keep performing.

If you want to understand the forces shaping markets in the decade ahead, this is a conversation you can’t afford to miss.

From Kyiv to Wall Street

Viktor Shvets’s story is as global as the markets he has spent four decades analysing. Born in Kyiv when it was still part of the Soviet Union, he migrated with his family to Australia in 1979. With little more than determination, he entered the University of Sydney, studied economics, and eventually found his way into Coopers & Lybrand before stepping into investment banking in the early 1980s.

What followed was a career that spanned the globe and the sectors that drive it. Shvets worked in Sydney, Melbourne, Hong Kong, London, Moscow and New York. He analysed everything from consumer companies to airlines to telecoms before moving into strategy in the wake of Lehman Brothers’ collapse in 2008. Today, he is Macquarie’s global strategist, based in New York, and an author of two books that weave history with predictions for the future.

“I describe our age as the easiest time to become a billionaire and the easiest time to sink into poverty. There is nothing in between.”

Adelaide Steamship and the analyst who called it

Shvets first made his name in the early 1990s when he pulled apart the financial web at Adelaide Steamship, then one of the largest conglomerates in Australia. By deconstructing cross-shareholdings and revealing hidden debts, he concluded the company was worth far less than the market believed. The call proved correct, AdSteam collapsed, and Shvets cemented his reputation as a forensic thinker.

“It was nothing more than a tedious accounting exercise, but at the time very few people were doing it.”

This early experience shaped his career long after. The lesson was clear: beneath the surface, markets are never as solid as they appear.

The changing face of markets

Over 40 years, Shvets has watched markets transform. Analysts once differentiated themselves with deep, painstaking research. They built spreadsheets from scratch, typed reports on typewriters, and sifted through company filings in person.

Today, the pace is relentless and information is commoditised.

“You can no longer differentiate yourself with Excel. Everyone relies on FactSet and Bloomberg. Analysts are expected to know companies well, maintain relationships, and act as marketing agents. The role is very different to what it was in the 1980s.”

For strategists, the change is even more dramatic. The old world of economic and capital market cycles, he argues, ended after the Global Financial Crisis.

“In the 70s, 80s, and 90s, you could look at the cycle and say buy cyclicals here, buy defensives there. That world ended around 2008. Today there are no real cycles, and without cycles there is no mean reversion. The rules have changed.”

The cloud of finance

One of Shvets’s central ideas is that financial markets now exist in what he calls a “cloud of finance.” Since the 1980s, the growth of financial assets has far outpaced the growth of real economies. Debt, liquidity, and financial instruments have multiplied on top of one another, creating a system that dwarfs the underlying productive base.

“In the 1950s through the 1970s, debt and liquidity relative to GDP were about one to one. Today, the value of financial instruments could be as high as a thousand trillion dollars, many times larger than the underlying economy.”

This separation has profound consequences. Financial markets no longer obey the same rules as the real economy. Central banks, aware of the fragility, have repeatedly stepped in to limit volatility.

“The bigger the mountain of capital, the less volatility we can tolerate. A shock in financial markets can easily destroy the real economy below it.”

Inequality, technology and the price of capital

The rise of the cloud of finance has not been without cost. Shvets believes it has turbocharged inequality and accelerated technological change.

“The more you financialise, the more those closest to the fountain of capital become rich, while those who rely on wages fall behind. It massively increases inequality.”

At the same time, cheap and abundant capital has sped up technological innovation.

“Humans have always been inventive, but the speed of progress depends on capital. The more capital and the lower the cost, the faster technology propagates.”

The result is a polarised world, where opportunities are immense for some and increasingly limited for others.

Politics and the insanity premium

While financialisation has created a system awash with capital, Shvets warns that politics could be the trigger for future instability. He calls it the “insanity premium.”

“None of these things have to go wrong if we are sane. But political angst over inequality, jobs, and the future is driving erratic decisions. That is the biggest risk to markets.”

Unlike past crises, he does not expect a Lehman-style collapse. Instead, the danger lies in policy errors driven by political populism. Efforts to gate capital, weaken currencies, or restrict cross-border flows could destabilise the cloud of finance.

“The biggest issue is not volatility of equities. The biggest issue is the functioning of the capital system itself. Governments should reduce volatility, not create it. Regulators must scan the horizon, identify problems early, and have the tools to fix them.”

A world without cycles

Shvets’s refusal to anchor strategy in traditional cycles leads him to conclusions that challenge consensus. For example, the long-standing debate about small caps versus large caps holds little meaning for him.

“In the past, small caps were considered more cyclical. But if cycles do not matter, that distinction is irrelevant. What matters is whether a small company can become a large company. Market concentration will remain high, and a handful of stocks will continue to drive returns.”

The investor’s dilemma

So where does this leave investors? On one hand, financial markets are detached from real economies and inequality is rising. On the other, risk assets have structural support from abundant capital and central bank backstops.

“Equities are no longer a reflection of real economies. They are part of the cloud of finance. As long as capital remains abundant and regulators do their job, risk assets will perform. The danger is political insanity. That is what could derail markets.”

For investors, this means letting go of some old assumptions. Cycles, mean reversion, and valuation anchors are less reliable than before. The focus should be on understanding where capital will flow and which companies can harness it.

“We demanded wealth creation beyond our productivity. The only way it could be delivered was through financialisation, bringing future consumption into the present. But everything has a price, and we are paying it now.”

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