The Rate of Return on Everything

Discussion in 'Economics' started by Clubber Lang, Feb 15, 2018.

  1. The Rate of Return on Everything
    The lead authors of the study – Oscar Jorda, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, and Alan M. Taylor – reported the findings of their massive study in a paper entitled The Rate of Return on Everything, 1870-2015. In it, researchers looked at 16 advanced economies over the past 145 years. Specifically, they compared returns on equities, residential real estate, short-term treasury bills, and longer-term treasury bonds.

    Posted this in the Entrepreneur Section with some comments.
    Figured I would put it here too because the study was worth a look.
    toc, zdreg, 777 and 3 others like this.
  2. Could you guys please tell the differents between Bonds and Treasury bills?
  3. JackRab


    I did a quick google for you...

    The major difference among them is the time you need to wait to collect your principal: Treasury bills have maturities of a year or less. Treasury notes are issued with maturities from two to ten years. Treasury bonds are long-term investments that have maturities of 10 to 30 years from their issue date.

    PS.. Google has been around for quite a while you know... it's pretty handy if you want to get a quick answer to everything...
    gkishot, Sig, dealmaker and 3 others like this.
  4. In conclusion,
    Life is all about Risk. vs The Reward,
    I personally like The Reward. alot. -- so I take the necessary exposed, inherent risks.
    Risk doesn't have to be, or sound, like such an ugly word's only ugly in the wrong hands.
    If you like risks, and are equally competent too, you can produce a cornucopia of fruitful returns, :wtf:, o_O from Miss Lady Fortuna Market,
    Last edited: Feb 15, 2018
  5. JackRab


    I actually think that the difference of returns on Real Estate and Equity vs Bonds would mainly come from an expectation of expanding economy.

    GDP is current... and everyone knows the equity markets look ahead, to the medium to long term. So if GDP keeps growing and you expect it to keep growing due to growing population etc... than you would want to be in equity and real estate. Equity since there will be more to service/manufacture. Real Estate since more people on the same land. So yes, like the article say, I would expect to earn more than the GDP growth rate in that case.

    Treasury/Bonds need to cover inflation and a bit of risk...

    Japan had it's lost decade mainly because it's stuck in a population decline... that puts a break on everything.

    If globally there's no more population growth. What comes out (of the womb) goes in (the ground)... no natural growth, and if there's also no growth due to everyone more or less being in the same middle class wealth... than there's no GDP growth, no inflation, no real returns on all capital combined.
  6. 777


    I hope your trading lIves up to your name:

    Clubber Lang... boom! boom! boom!

    *nice find with this paper.
    Clubber Lang likes this.
  7. zdreg


    it is probably an update of a book "The Triumph of Optimists 101 Years of Global Investment". to their credit the authors of rate of return mention the book on page 3 of their working paper and in the bibliography.
    Last edited: Feb 16, 2018
  8. toc


    Stocks and Housing average around 8-9%. Only thing with housing is that it might be little less liquid and running a rental show can be time consuming and stressful. However, investing into REITs might be a good way to deal with liquidity and stress issues.

    Wish this study had also included the sector rotation type investing. Internet in 90s, Real Estate and Energy in 00s would have given huge returns to those heavy in these sectors.

    What's the new trend going from here on? Bitcoin/Cryptos ?? Kind of dicey at the moment.

    Electric vehicles, alternative energies, medical innovations produce decent logic right away.
    Clubber Lang likes this.
  9. ironchef


    The results contradicted modern portfolio theory and capital asset pricing model: Housing had the same return as stocks but only half the volatility for over 100 years.

    Or say it another way, housing has twice the alpha? So it is possible to find investments that has consistently higher alpha over time than the market. Does give us traders hope.
    Clubber Lang likes this.
  10. volpri


    Winning is EVERYTHING. In the markets as well as football. It IS NOT about the journey or the experience.
    Last edited: Feb 16, 2018
    #10     Feb 16, 2018
    lawrence-lugar likes this.