The Triumph of the Optimists
In 2001 Dimson, Marsh, and Staunton published Triumph of the Optimists: 101 Years of Global Investment Returns.
As we saw previously in my article about long term returns in France, a 100-year horizon is required to evaluate stock returns with a 1.5% standard deviation. Having a 100-year history for many different countries goes far beyond the usual US-only 1926-to-today results.
Investment Returns Results
The book presents the main results concerning bills, bonds, and stock returns:
- there a massive geopolitical and technological change during this period, which led to massive growth differentials and asset value redistribution
- some countries like China and Russia had a revolution leading to a total loss of capital
- hyperinflation wiped out German and Austrian bondholders after the WWI.
- inflation outpaced bond and bill returns in Japan and Europe, which led to a permanent loss of capital for Fixed Income investors in most countries.
- stocks outperformed bond and bills in all countries as inflation eroded fixed income investment returns
- stocks had a different performance by country: the best performing countries are South Africa, Australia which performed 4 times better than the USA, European countries stock returns were around 10 times lower than the US.
While the US performance is often taken as a benchmark, that choice is a very optimistic choice of picking the winner using 20/20 hindsight.
Global Investment Returns Yearbooks
Following their publication, the authors were contacted by many scholars from other countries who helped them gather data for additional markets.
They continued to produce long term studies first with ABN AMRO until 2008, then with Credit Suisse from 2009 onwards.
Each yearbook if a 70-page document composed of several long-term oriented articles. We will review these in turns.
A presentation by Dimson to his alumni at London Business School is available gives a presentation by the author of the main results: