The CFA Institute Research Foundation just released a monograph titled “Financial Market History”. I haven’t had the time to go through all the essays but the first one alone is a gem.

Written by Elroy Dimson, Paul Marsh and Mike Staunton (DMS), “Long-Term Asset Returns” is a look at the historical returns over the last 116 years over a whole bunch of different countries. This is largely a continuation of their work “Triumph of the Optimists: 101 Years of Global Investment Returns” and an extension of their work on the Credit Suisse Global Investment Returns Yearbook 2016.

In this essay, DMS use the data that they have painstakingly collected to promote three things:

  1. Technology can render some industries obsolete but some industries haven’t actually changed much over the last 116 years.
  2. Equity returns are still the best bet for investors with a long time horizon.
  3. Don’t be too concerned with exchange rates as they tend to have almost zero effect in the long-run.

In fact, this one chart in the essay says it all.


I encourage everyone to take a look at their work and examine the assumptions or the intricate details of their data collection but I think their main message isn’t too hard to decipher.