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Triumph of the Optimists: 101 Years of Global Investment Returns

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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.

320 pages, Hardcover

First published January 1, 2002

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Elroy Dimson

16 books3 followers

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Displaying 1 - 10 of 10 reviews
Profile Image for George Jankovic.
140 reviews98 followers
May 7, 2016
The best book on the history of the stock and bond markets across a multitude of countries.
3 reviews1 follower
May 16, 2015
Extremely interesting collection of data on historical asset class returns.

You may know that stocks have done well in the US, but this allows you to start to answer some questions you should have, like: "What happened to the financial markets if a country lost a war / had hyperinflation / underwent a major government regime change ?" While there is still some selection bias in the countries presented (they had relatively continuous equity markets for the last 100 years, where 100% loss was not experienced, i.e. China and Russia are missing), it does include data on Germany and Japan.

Dimson offers insight into correlations across asset classes and geographies over time, the persistence of the value/size premium over geographies and time, and the prospective risk premium.

Great perspective for the advanced amateur investor or professional investor.
60 reviews
March 7, 2019
Fantastic book to see how historically the stock market (stock indices) has been more profitable than other typical investments (real estate, gold and bonds). It shows how even in a century where so much destruction took place thanks to governments, citizens still prospered considerably. If you want updated data, Credit Suisse publishes a magnificient “yearbook” every year.
Profile Image for Joel Mitchall.
20 reviews7 followers
January 2, 2018
Most professional investors would be very familiar with Dimson, Marsh & Staunton's research, particularly their annual release in the Yearbook. This book takes us back to the beginning, meaning that most of the data is now out of date, but even so, the themes and commentary is great. For non-professional investors, this would provide a very handy background to events in global markets, asset classes, and economies.

Note: It would be great to see a reprint of this every 10 years or so, with a collection of the research pieces they have provided over the year (a little like has been done with Buffett's annual letter to shareholders).
Profile Image for chris mukhar.
57 reviews1 follower
May 6, 2022
The best view of historical asset returns that I have read yet. Key takeaway is that the US is a bit of an outlier historically and benchmarking only against US historical returns likely leads to an optimist view of the future. The authors take a dim view of the future equity risk premium, presuming it will be about 3% geometric real return moving forward. I didn't find the author's view of this convincing as it seems like just using the historical global average would be more realistic, which was a 5% annual geometric risk premium relative to bills. The return for bonds was 0.7% historically, across the world.

Definitely written as a textbook, but I found it to be an easy read.
1 review
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June 30, 2020
classic
This entire review has been hidden because of spoilers.
Profile Image for Jacob.
Author 1 book305 followers
November 8, 2010
Very useful, especially for its international perspective and detailed graphing of returns that are usually only expressed as century long averages in many other places.
Profile Image for Peter Keilman.
3 reviews1 follower
December 28, 2012
Important for a background understanding of many countries and markets throughout the modern era.
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