Feb

11

The yearly update to Dimson, Marsh and Staunton's statistical masterwork is out:

Credit Suisse 2016 Global Investment Returns Released

anonymous comments: 

I guess I shouldn't be surprised, but still I am, by the number of country equity market wipeout events. The Austrian market got wiped out after WWI (and II). There was a hyperinflation, but aren't stocks supposed to represent ownership of real assets?

Obviously Russia and China had wipeout events.

None of the island countries — UK, New Zealand, Australia, arguably US, or Japan — ever saw their equity markets wiped out, although Japan came close, with a ~2 order of magnitude collapse from WWII.

Possible lessons:

–own the island countries
–equities can't keep up with hyperinflations

Elroy Dimson responds: 

Hi Vic,

Thanks for writing. Hope you and yours are well.

The former Austrian Empire comprised present-day Austria, Hungary, the Czech Republic, Slovakia, Slovenia, Bosnia-Herzegovina, Croatia, parts of Poland, Romania, bit of Italy, Ukraine, Moldova, Serbia, and Montenegro. All but one of those countries ceased to be part of Austria. No wonder it disappointed in investment terms.

I don't like the "own the island countries" conclusion. Sticking with your facetious interpretation of history, how about "buy English-speaking countries"? Or "invest in nations that speak excellent English"? See the chart from page 21 of the Global Investment Returns Sourcebook 2016:

Chart 8: Real annualized equity returns (%) in local currency and US dollars, 1900–2015


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