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Review
At the very least, this [book] suggests that the recent blind adherence to the cult of the equity needs to be questioned and that the strategic weighting of bonds in institutional portfolios should be increased. -- Philip Coggan, Financial Times
A model of how investor research should be carried out. . . . Like most great books, Triumph of the Optimists has us saying 'Wow!' and 'Unbelievable!' with startling regularity. . . . This is a book that belongs on every investor's bookshelf. -- Victor Niederhoffer and Laurel Kenner, "Money" columnists, msn.com
Connoisseurs of financial history will find plenty to enjoy in Triumph of the Optimists. . . . The evidence produced by Mr. Dimson and his colleagues is striking, [and]. . . these issues are more than just academic. . . . A provocative lesson. -- Matthew Lynn, Financial Times
By far the most important investment book in years. . . .It is the best and most complete source of data yet available. . . . If you spend an hour with it and don't learn anything worth the price then you're truly lousy at learning about markets. . . Right now, buying this book makes more sense than buying stocks. -- Ken Fisher, Bloomberg Money
A brilliant new book. -- Jason Zweig, Time
Our favorite book on global stock market performance. . . . [It] epitomizes outstanding investment research. . . . Unless intelligent life is discovered on another planet and a stock market is found to have been operating there for some centuries, it is unlikely that much new data can be brought to bear on the issue of long-run stock returns. Triumph of the Optimists may well be the last word on the subject for some time to come. -- "Active Trader magazine
A model of how investor research should be carried out. . . . Like most great books, Triumph of the Optimists has us saying 'Wow!' and 'Unbelievable!' with startling regularity. . . . This is a book that belongs on every investor's bookshelf. -- Victor Niederhoffer and Laurel Kenner, "Money" columnists, msn.com
Connoisseurs of financial history will find plenty to enjoy in Triumph of the Optimists. . . . The evidence produced by Mr. Dimson and his colleagues is striking, [and]. . . these issues are more than just academic. . . . A provocative lesson. -- Matthew Lynn, Financial Times
By far the most important investment book in years. . . .It is the best and most complete source of data yet available. . . . If you spend an hour with it and don't learn anything worth the price then you're truly lousy at learning about markets. . . Right now, buying this book makes more sense than buying stocks. -- Ken Fisher, Bloomberg Money
A brilliant new book. -- Jason Zweig, Time
Our favorite book on global stock market performance. . . . [It] epitomizes outstanding investment research. . . . Unless intelligent life is discovered on another planet and a stock market is found to have been operating there for some centuries, it is unlikely that much new data can be brought to bear on the issue of long-run stock returns. Triumph of the Optimists may well be the last word on the subject for some time to come. -- "Active Trader magazine
Product Description
Investors have too often extrapolated from recent experience. In the 1950s, who but the most rampant optimist would have dreamt that over the next fifty years the real return on equities would be 9% per year? Yet this is what happened in the U.S. stock market. The optimists triumphed. However, as Don Marquis observed, an optimist is someone who never had much experience. The authors of this book extend our experience across regions and across time. They present a comprehensive and consistent analysis of investment returns for equities, bonds, bills, currencies and inflation, spanning sixteen countries, from the end of the nineteenth century to the beginning of the twenty-first. This is achieved in a clear and simple way, with over 130 color diagrams that make comparison easy.
Crucially, the authors analyze total returns, including reinvested income. They show that some historical indexes overstate long-term performance because they are contaminated by survivorship bias and that long-term stock returns are in most countries seriously overestimated, due to a focus on periods that with hindsight are known to have been successful.
The book also provides the first comprehensive evidence on the long-term equity risk premium--the reward for bearing the risk of common stocks. The authors reveal whether the United States and United Kingdom have had unusually high stock market returns compared to other countries. The book covers the U.S., the U.K., Japan, France, Germany, Canada, Italy, Spain, Switzerland, Australia, the Netherlands, Sweden, Belgium, Ireland, Denmark, and South Africa.
Triumph of the Optimists is required reading for investment professionals, financial economists, and investors. It will be the definitive reference in the field and consulted for years to come.
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The year 2001 was scarred by terrorism, and financial markets were beset by turmoil. Read the first page
Front Cover | Copyright | Table of Contents | Excerpt | Index
The year 2001 was scarred by terrorism, and financial markets were beset by turmoil. Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Index
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Most Helpful Customer Reviews
12 of 13 people found the following review helpful
Format:Hardcover
The book provides a lot of data, which investors should be aware of before making a rational decision. The book does not provide any advices on investments strategies, so it is not biased towards any of them. However, a rational evaluation of markets and strategies for long term investments needs to be based on a comprehensive understanding of the data. The books provides not only the data for last 101 years for all important markets, but also basic analysis of some of these data. The only weak point I noticed is the time granuality of some of the data (e.g. yields and stddev) which are presented for decades. Yearly (or better monthly) data would provide a better basis for a more comprehensive analysis.
The book is a must reading for investors, especially those being depressed by the market developments in last three years.
1 of 1 people found the following review helpful
Format:Hardcover
This book provides stock and bond return data for sixteen countries over the course of the 20th century, making it the most extensive study of its kind. This book is expensive, but I found it well worth the price: not only is the data incredibly illuminating, but its a large colour hardback with plenty of graphs and illustrations.
As the book shows, some popular sources have overstated the size of the equity risk premium -- due largely to survivorship and data collection biases. On the bright side, real equity returns and the equity risk premium were positive in all sixteen countries. Real equity returns varied from 2.5% in Belgium and 7.6% in Sweden, with the U.K. at 5.8% and the U.S. at 6.7%. These are huge discrepancies, especially if compounded over 100 years. If you needed any more persuasion that international diversification is a must, then here it is.
There's also data on currency returns, which is absolutely vital for assessing the actual returns from an internationally diversified portfolio. The authors show that long-term exchange rates tend to track purchasing power parity, lessening the long-run risks of currency exposure. Additionally, the authors show that, on average, the correlation between local real returns and real exchange rate returns has been low and negative. This low negative correlation means that the currency risk of international stocks adds only slightly to their total risk for domestic investors.
Perhaps most surprising is the finding that real returns for short- and long-term government bonds have been negative in five countries. This is due to hyperinflations, and is perhaps less likely to happen in the future with inflation-targeting central banks. However, it does provide a good reason to link your bonds to inflation if at all possible.
There's a lot of talk at the moment about the need to overweight emerging markets to profit from the economic futures of countries such as China and India. It must be noted that, at the turn of the century, the U.K. was the world's dominant superpower and the U.S. was still, in some ways, emerging. However, real returns were only 0.9% higher in the U.S. Don't write off the "developed" countries over the course of the next century.
Since valuation levels have risen and dividend yields have fallen recently, you can consider the range of real equity returns in this book as estimates on the high-side of what can be expected in the future. This is certainly less than many people are planning on -- particularly if you are investing through high-cost products.
As the book shows, some popular sources have overstated the size of the equity risk premium -- due largely to survivorship and data collection biases. On the bright side, real equity returns and the equity risk premium were positive in all sixteen countries. Real equity returns varied from 2.5% in Belgium and 7.6% in Sweden, with the U.K. at 5.8% and the U.S. at 6.7%. These are huge discrepancies, especially if compounded over 100 years. If you needed any more persuasion that international diversification is a must, then here it is.
There's also data on currency returns, which is absolutely vital for assessing the actual returns from an internationally diversified portfolio. The authors show that long-term exchange rates tend to track purchasing power parity, lessening the long-run risks of currency exposure. Additionally, the authors show that, on average, the correlation between local real returns and real exchange rate returns has been low and negative. This low negative correlation means that the currency risk of international stocks adds only slightly to their total risk for domestic investors.
Perhaps most surprising is the finding that real returns for short- and long-term government bonds have been negative in five countries. This is due to hyperinflations, and is perhaps less likely to happen in the future with inflation-targeting central banks. However, it does provide a good reason to link your bonds to inflation if at all possible.
There's a lot of talk at the moment about the need to overweight emerging markets to profit from the economic futures of countries such as China and India. It must be noted that, at the turn of the century, the U.K. was the world's dominant superpower and the U.S. was still, in some ways, emerging. However, real returns were only 0.9% higher in the U.S. Don't write off the "developed" countries over the course of the next century.
Since valuation levels have risen and dividend yields have fallen recently, you can consider the range of real equity returns in this book as estimates on the high-side of what can be expected in the future. This is certainly less than many people are planning on -- particularly if you are investing through high-cost products.
Format:Hardcover
Very good book and should be THE reference book for all investors. Would also recommend Endgame by John Mauldin outlining the current crisis and also This Time is Different by Reinhart and Rogoff, which illustrates how common financial collapses are and how they are resolved.
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