IN THE world of central banking, the political sphere and financial markets not much has changed in the last 10 years. Indeed, in most cases the exact same mistakes made at the end of the bubble that brewed at the start of this century are being remade.

Yes, some of the players, markets and instruments might have changed, but many familiar strains can be seen. This does not bode well.

The mistake-makers-in-chief of the last few years have been the central bankers, who through their never-ending programmes of quantitative easing and rock-bottom interest rates have allowed the profligacy of politicians to explode unchecked, burdening future generations with a gargantuan debt pile, which in all likelihood will never be repaid.

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Central bankers have learned nothing over the last decade, but should by now have realised that focusing on charts and models is very different to real life. Janet Yellen extraordinarily said recently that there won’t be another financial crisis in her lifetime. She is wrong and the next crisis will be firmly laid at her and other central bankers’ doors.

Politicians, who shifted the blame of the last crisis on to “the bankers”, have also wasted the last 10 years. Public debt has ballooned, despite the growing economy, ensuring financial pressures for the currently young and yet to be born.

Politicians have ignored the virtue of putting aside money for rainy days, aided by the lack of any real cost of borrowing. Moreover, most attempts at fiscal or economic reform have been considered too hard and blank cheques have been written instead.

What lessons should investors have heeded over the last 10 years? In fairness one of the major ones has been wholeheartedly grasped, in that the key determinant that investors need to keep in mind is whether new liquidity, normally in the form of debt but also central bankers “monetary magic money”, is being created.

Fresh money does undoubtedly support asset prices, from football players and fine art all the way through to stock prices and property. Interestingly, investor complacency seems to be growing at a time of stretched valuations, just as central bankers are supposedly about to tighten liquidity.

Another lesson is that you do not need lots of economic growth to generate positive asset market returns. The economic conditions of the last few years have been insipid, yet asset prices have boomed, showing that specific investment fundamentals should be focused on.

That said, the relationship between excess liquidity and asset prices, as shown through the rapid rise of passive investing, is a major risk for the future. There seems little doubt that the easy liquidity conditions have fuelled a passive bubble that could easily pop when central bankers finally start to tighten monetary policy.

Interestingly, all the concerns that grew during 2008 over excessive valuations, tight credit spreads and poor liquidity seem to have been mostly forgotten. The reach for yield that we are currently witnessing, which again is in no small part down to the central bankers and interest rates that are too low, bears all the hallmarks of the last crisis.

Over the past 10 years investor sentiment and positioning have become even more important as inputs behind an investor’s decision making. Opportunities to go against the crowd, such as at the start of 2016, can be seen clearly in data and this is an increasingly useful tool.

That said, we have also learned that Keynes was right when he remarked that the “market can stay irrational much longer than you can stay solvent”. The widely expected and never-arriving rise in bond yields is clear evidence of that.

So what about the future? A key lesson for all of us is that future investment returns are going to be lower. The current rates of return from fixed interest markets and valuation levels in equities will prevent the healthy returns of the last eight post-crisis years being repeated.

Partly that is mathematical fact, in the case of bonds, but with equity valuations now extremely high, all of us involved in markets need to reset our expectations.

Like many difficult lessons, it might just be easier to ignore such thoughts and hope for the best, but we believe that would be a mistake. Investors will be able to make money in the next 10 years but it is going to be hard work and the need to be selective is pressing.

There will be lots of lessons to learn from the coming 10 years and quite a few of them will be painful.

Tim Wishart is senior investment director at Psigma Investment Management.