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12 of 13 people found the following review helpful
5.0 out of 5 stars A must reading for investors, 14 May 2003
By 
Dr Marek Makowski (Laxenburg, Austria) - See all my reviews
This review is from: Triumph of the Optimists: 101 Years of Global Investment Returns (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.
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2 of 2 people found the following review helpful
5.0 out of 5 stars Equities triumph, but by less than is commonly thought, 3 Mar 2011
This review is from: Triumph of the Optimists: 101 Years of Global Investment Returns (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.
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5.0 out of 5 stars Essential for any serious investor, 8 May 2011
This review is from: Triumph of the Optimists: 101 Years of Global Investment Returns (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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