Data from Dimson et al. (2002). The differences in
compounded annual returns between stocksand short-term
governments/long-term governments are reported for each
country.
Whileequityreturnswerehigherthanwhatyouwouldhave
earnedinvestingingovernmentbondsorbillsineachofthe
countries examined, there are wide differences across
countries. If you had invested in Spain, for instance, you
wouldhaveearnedonly 3 percentovergovernmentbillsand
2 percent over government bonds on an annual basis by
investinginequities.InFrance,incontrast,thecorresponding
numbers would have been 7.1 percent and 4.6 percent.
Lookingat40-yearor50-yearperiods,therefore,itisentirely
possible thatequityreturns canlagbondorbillreturns, at
leastinsomeequitymarkets.Inotherwords,thenotionthat
stocksalwayswininthelongtermisnotonlydangerousbut