This Is No Century for Optimists. Can It Change?
War in Ukraine and the return of inflation won’t help equity risk premiums rediscover their mojo, which has flattened out in most of the world since the millennium.
A war in Europe involving a nuclear-armed power is just part of it.
Photographer: Sergei Supinsky/AFP/Getty
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One of the greatest investment books ever written, which shows up on the desks and bookshelves of countless successful investors, is Triumph of the Optimists, published two decades ago by Elroy Dimson, Paul Marsh and Mike Staunton, a trio of British academics then working together at London Business School. A massive work of data analysis, it aimed to build a history of stocks, bonds and bills for the whole 20th century, across the globe, to measure the equity risk premium — the average extra annual return compared to bonds or bills that investors gained by taking the risk of buying stocks.