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Are you sure about that? Summary Edition Credit Suisse Global Investment Returns Yearbook 2020, by Dimson, Marsh, and Staunton have (page 23) world mean real re
by omgwtfbyobbq 6y ago
Are you sure about that? Summary Edition Credit Suisse Global Investment Returns Yearbook 2020, by Dimson, Marsh, and Staunton have (page 23) world mean real returns from 1900 to 2019 for equities at either 5.2% or 6.6%, depending on whether you look geometric or arithmetic mean.
I could see 300bps real for a mix of equities and bonds, but equities alone appear to be much higher.
- hogFeast 6y agoI would Google Equity Risk Premium. I believe your estimate is correct but that assumes a risk-free rate of more than zero. The risk-free rate is close to zero, which is why DSM forecast ERP of 350bps (and I believe their data still has survivorship bias). Also, remember that we are quite near the top in a market that is 50-60% of world share, so I would be conservative about projections when the end year is favourable (as an example, Stocks for the Long Run had a very big estimate of long-term returns in the late 90s...that fell in the subsequent years).