C&B Notes

Equity Returns Since 1900

In our recently-circulated first quarter 2013 letter, we discussed the long-term minimum expected returns that people require to forego current consumption for future consumption (i.e. a baseline real interest rate).  Based on a number of previous studies, we estimated this return to be 3-4%, which serves as a building block in our minimum hurdle rate for equity investments.  This blog entry offers more data from the period 1900 through 2011.

Below is the best, middle, and worst case scenarios for stocks of sixteen countries from 1900-2011 (real return series on a log graph).