Triumph of the Optimists: 101 Years of Global Investment Returns

By Elroy Dimson, Mike Staunton, Paul Marsh

"Brilliant."--Time
"By far the most important investment book in years."--Bloomberg Money
"A book that belongs on every investor's bookshelf."--MSN.com
An essential and authoritative account of a century of investment returns in sixteen countries--the U.S., the U.K., Japan, France, Germany, Canada, Italy, Spain, Switzerland, Australia, the Netherlands, Sweden, Belgium, Ireland, Denmark, and South Africa

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. In Triumph of the Optimists, renowned investment authorities Elroy Dimson, Paul Marsh, and Mike Staunton 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.

• Format: Hardcover
• Language: English
• ISBN: 0691091943
• ISBN13: 9780691091945
• Release Date: January 2002
• Publisher: Princeton University Press
• Length: 352 Pages
• Weight: 3.90 lbs.
• Dimensions: 1.3" x 8.6" x 11.3"

Customer Reviews

Priceless

This book, together with a good book on Warren Buffet basics, will provide the private stock market investor with the tools needed for extraordinary investment success. First, a book on Buffet basics will teach the investor how to identify exceptional businesses and how to value them correctly (by calculating the present value of the total cash that can be extracted from the business during its expected life). Next, Triumph of the Optimists will be of tremendous help in selecting the appropriate valuation variables, e.g. equity risk premium, discount rate, etc to be used. By incorporating the statistics provided in this book into your valuations, you will have 101 years of global investment history on your side. As a global investor for more than twenty years, I sometimes had to learn the hard way that "reversion to the mean" is a basic investment truth that dare not be ignored. This book will tell you what that "mean" is. Some may argue that this book is expensive, or that its statistics may be slightly distorted, but in real life this book's practical value makes it priceless.

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.

Simply Amazing

For anyone who has ever wondered: Should I invest in stocks or bonds? In the US or abroad? What about inflation? And much, much more. Full of four color charts, facts, figures and an exceptionally readable text accessible to everyone. A tour de force for the average investor and student of the markets alike.

The most Important book for any investment professional

Any serious investor or student of the market should own a copy of this book. This book presents and analyzes data from many countries in a simple, easy to understand manner. It examines seasonal movements in stock prices, moves in different sectors, equity and bond risk premiums, size effects, effects of exchange rates, returns of various investment strategies, the list goes on. It presents over 100 years of stock and bond returns, from seventeen different countries, providing an incredible perspective on market movements.In order to invest successfully, it is important to study the history of price movements, in various economic conditions. This book contains the information you will need, presented in an easy to understand manner.To have this amount of data and analysis all in one book, is a huge achievement by the authors, and is of immense benefit to the serious investor.