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.

Product Details

• Amazon Sales Rank: #397157 in Books
• Published on: 2002-01-01
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 320 pages

Review
"It's a big book chock full of data, analysis and bonny charts, covering 101 years of investing". -- Alen Mattich, Dow Jones Newswires

"… and now a brilliant new book. -- Jason Zweig, Time Magazine

A brilliant new book. -- Review

Our favorite book on global stock market performance. . . . [It] epitomizes outstanding investment research. -- Active Trader magazine

The evidence produced by Mr. Dimson and his colleagues is striking. . . A provocative lesson. -- Matthew Lynn, Financial Times

This [book] suggests that the recent blind adherence to the cult of the equity needs to be questioned. -- Philip Coggan, Financial Times

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 )

Review
This will become the definitive empirical basis for analysis of the world's capital markets over the twentieth century. It is an important work of scholarship; no one else has calculated the equity premium of a large number of countries over the long term. In doing so, the book contributes to the very lively debate on the magnitude of the equity premium and will make a splash.
(William Goetzmann, Yale University )

Customer Reviews

Very disappointing given the price
This is a very handsome book with lovely graphs etc. However I was after a useful summary of historical market performance.

This book was lacking in several respects:

1. The numbers behind the graphs are not provided and are not available so you cannot do any further analysis yourself. The graphs themselves are also drawn in such a way that it is hard to extract the numbers using a ruler.

2. The problem of survivorship bias. They claim that while the 16 countries analysed are an incomplete list (only 70% of world GDP in 1900), this is not a big problem, they feel. Their message that stocks do well in the long run supposedly remains intact, however they do not provide any solid evidence of this. The countries left out of course suffered terrible performance, with total confiscation of assets in most cases and major losses in others.

The countries left out include: Russia, China, Eastern Europe, Latin America. As an example, Argentina was the wealthiest country 100 years ago but was left out. They claim that their criterion for inclusion was the availability of data, but Switzerland was included even though the data is incomplete.

In my opinion, some attempt should have been made to adjust for this problem.

3. No assessment is made of the issue of capital controls etc as an impedement to implementing the world indexing strategy. It is simply assumed that equal dollar indexing could be implemented without any costs, and with no taxes.

All in all, this book fails to provide a realistic and convincing assessment of global investment returns in the real world.

Victor Niederhoffer uses this book to justify his bullishness on stocks, Sorry Vic, no cigar.

Triumph of the Investigators
"In writing this book," authors Dimson, Marsh, and Staunton conclude, "we set out to answer four big questions: How have stock markets performed over the twentieth century, domestically and internationally? How has this compared with bonds and bills? What has been the impact of foreign exchange fluctuations? And what toll has inflation taken?"

In answering these questions, the authors have achieved perhaps the greatest triumph: assembling a 101 year database from 16 countries that is free from the "easy data" biases that result from utilizing readily available--but skewed--financial information.

In the spirit of their title, the authors find that stocks worldwide provide real risk-adjusted returns above and beyond bills and bonds. Interestingly, their estimates of risk premia are more modest than those offered by traditional sources. They also provide intriguing support for seasonality effects and the favorable returns associated with high dividend yields, value investing, and worldwide diversification.

Quite simply, I know of no other source of information on the "big picture" of investing that is as thorough or as lucidly outlined. This is a rare work of theoretical *and* practical significance.

A remarkable and important book
Triumph of the Optimists: 101 Years of Global Investment Returns is a remarkable and important book. Churchill's maxim that "The further backward you can look, the farther forward you are likely to see" is useful in approaching this book. The authors have painstakingly created data series back to 1900 for 16 countries and come to brilliant conclusions about what the future holds for investors. From the past the future flows, and as long as human beings price securities it is likely that we will continue to make erroneous predictions based upon our most recent experience.

Triumph of the Optimists shows readers what the most likely returns will be for world investors and offers vital data for investors planning for the future. This is a "must have" book for both professional and amateur investors.