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Triumph of the Optimists: 101 Years of Global Investment Returns [Hardcover]

by Elroy Dimson, Paul Marsh, Mike Staunton
4.1 out of 5 stars  See all reviews (16 customer reviews)

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Book Description

January 1, 2002 0691091943 978-0691091945

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.



Frequently Bought Together

Triumph of the Optimists: 101 Years of Global Investment Returns + The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success + The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
Price for all three: $137.90

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Editorial Reviews

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

From the Inside Flap


"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


"Recent years have seen unprecedented public interest in the stock market, but there is a tendency for investors to concentrate on recent U.S. stock market performance. Progress in understanding financial markets requires a much longer timeframe and a global perspective. This book presents and analyzes data from many countries in a simple, standardized way that makes comparisons easy. It makes a number of extremely important points and goes well beyond simple summaries of average returns and historical volatilities to look at such issues as seasonality and industrial structure."--John Campbell, Harvard University


"No investor can afford to risk a penny in the markets without studying this book and absorbing its fascinating lessons. That advice applies whether you are professional or amateur, a youngster or hardened from experience, bold or conservative. This book is history at its most challenging and illuminating. The facts are astonishing, the presentation dazzling, the analysis brilliant, and the lessons profound."--Peter L. Bernstein, author of Capital Ideas and Against the Gods


"This is an important addition to the investment literature and will be widely used by both the academic and business community. To have the scope of data and analysis contained in this book available in one place represents a major contribution and improvement over what is now available."--Martin J. Gruber, New York University



Product Details

  • Hardcover: 320 pages
  • Publisher: Princeton University Press (January 1, 2002)
  • Language: English
  • ISBN-10: 0691091943
  • ISBN-13: 978-0691091945
  • Product Dimensions: 11.3 x 8.6 x 1.3 inches
  • Shipping Weight: 3.8 pounds (View shipping rates and policies)
  • Average Customer Review: 4.1 out of 5 stars  See all reviews (16 customer reviews)
  • Amazon Best Sellers Rank: #642,356 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews
99 of 114 people found the following review helpful
2.0 out of 5 stars Very disappointing given the price July 14, 2003
Format:Hardcover|Verified Purchase
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.
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24 of 26 people found the following review helpful
5.0 out of 5 stars Triumph of the Investigators June 23, 2002
Format:Hardcover
"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.
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25 of 30 people found the following review helpful
5.0 out of 5 stars A remarkable and important book June 14, 2002
Format:Hardcover
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.
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9 of 11 people found the following review helpful
5.0 out of 5 stars Priceless February 9, 2004
Format:Hardcover|Verified Purchase
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.
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16 of 21 people found the following review helpful
Format:Hardcover
A lot of work went into this book. But it is scarce on the conclusions side. I know this is deliberate and that the purpose of the authors was just to provide a volume of data with some interpretation but there are just too many loose ends.
First, although much is made of the quality of the data much of the data is from other authors and sources and is used blindly. In other words much of what the authors have done is collation.
Second, there are several countries that ostensibly did better than the U.S and Britain during the twentieth century but little is said about this fact and indeed the authors spend some pages justifying the emphasis on the U.S. and Great Britain during the twentieth century. But the reasons they give are hollow. There may have been justification but greater depth was in order.
Third, although there is a great deal of information in the book several graphs are presented in a confusing manner i.e. the same color line is used for several curves on the same graph making interpretation almost impossible.
Fourth, reading the book is in many places a lot like taking the SAT or GRE graph interpretation section. There is much here but it would have been much more impressive if the authors had drawn some deeper conclusions than was the case. Probably many will attempt to justify this deficiency by stating that the purpose of the book was the assembly of the data in one place and that others will use the data for developing profound interpretations and conclusions. But I don't believe that will happen: the authors understand that the main users of the book will be institutional and personal investors. That is sad for there is much to be interpreted here in a deep and satisfying manner.
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Most Recent Customer Reviews
5.0 out of 5 stars Amazing Resource for Investors
Triumph of the Optimists is a valuable guide to international investing. 16 developed countries are analyzed and returns for stocks, bonds and bills (as well as inflation) are... Read more
Published 9 months ago by MacheteJason
1.0 out of 5 stars Kindle Version: Cannot Resize Font
The Kindle version of this book does not support resizing of fonts, you can only zoom and scroll around each page. Returned it for a paper copy.
Published 9 months ago by mermaid415
4.0 out of 5 stars Another Book Review by the Aleph Blog
Good investors are typically skeptical. They don't buy every idea that comes their way, but they test and probe to find ideas with compelling value that are misunderstood by... Read more
Published on February 12, 2011 by David Merkel
5.0 out of 5 stars Triumph is a Triumph
Triumph of the Optimists is a terrific resource for those wanting to know more about how different types of investments have performed in different countries over the long term. Read more
Published on May 15, 2003 by Scott Smart, Dept. of Finance, Indiana University
5.0 out of 5 stars This is a knowledge bank
I was keenly looking for a topic that I did not find treated in this book either: some correlation between demographics and the performance of stocks and bonds. Read more
Published on February 2, 2003 by A. Agarwal
5.0 out of 5 stars outstanding accomplishment
If you remove good solid research and objectivity you have the foundation for 90% of the investment books at large. Read more
Published on July 11, 2002
5.0 out of 5 stars 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. Read more
Published on June 13, 2002
3.0 out of 5 stars must read for investors and traders
Great work, you get what you pay for. It is a must read for all investors.
Published on June 13, 2002 by james lackey
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