Section 3 places the modern US market record in broader historical and global context. Moving beyond the 1926–2025 US evidence base, it examines US stocks and bonds before 1925, global markets over the last 125 years, London markets, commodities, Japan, China, earlier international markets, and long-run index-construction issues.
The section’s purpose is to show that the United States was an unusually successful market, not the only possible long-run outcome. By widening the evidence across countries, centuries, and market regimes, this section of Exponential Wealth: Centuries of Stock and Bond Returns seeks to help readers understand survivorship bias, success bias, market disruption, and the limits of extrapolating from modern US history.
At a Glance
- This section looks beyond the modern US record. Section 3 extends the analysis past the familiar 1926–2025 US dataset to earlier US and global market history.
- It puts US success in context. It shows why the United States was an unusually successful market, not the only possible long-term outcome.
- It compares markets across countries and centuries. It examines global markets, London, Japan, China, commodities, and earlier international capital markets.
- It recognizes market disruption and survival risk. It shows how wars, revolutions, inflation, regulation, and market closures have shaped investor outcomes.
- It uses historical data more carefully. It helps readers think more critically about survivorship bias, success bias, and index-quality issues in long-run return analysis.
What Is Section 3, "Centuries of US and Global Returns," About?
Section 3’s objective is to help readers test the modern US record against a broader body of evidence. It shows how earlier US history and international market experience can change the way investors interpret long-run returns, country risk, market disruption, survivorship, and diversification.
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Who Should Read Section 3?
Section 3 is for investors, advisers, asset allocators, researchers, and investment committees that want to place the modern US record in broader context. It is especially useful for readers who rely heavily on US historical returns and need to understand global diversification, survivorship bias, success bias, market disruption, and the limits of extrapolating from one unusually successful country.
Why Is This Section Important?
The section places the modern US market record in a broader historical and global context, showing that US success was exceptional — not the only possible long-term outcome. By examining earlier US data and markets in London, Japan, China, and elsewhere, along with commodities, it explains why investors should not rely too heavily on the 1926–2025 US experience.
It also seeks to help readers think more critically about survivorship bias, success bias, market disruption, and index-quality issues. Wars, revolutions, inflation, regulation, market closures, and weak or incomplete data have all shaped investor outcomes. Section 3 therefore encourages readers to use history more carefully and to recognize the importance of global diversification when interpreting long-run stock and bond returns.
What You Will Learn from Section 3
- Look past the US success story. Learn why the strong modern US record should not be treated as the only possible long-run outcome.
- Compare markets across countries and centuries. See how earlier US data, global markets, London, commodities, Japan, and China broaden the evidence base.
- Recognize what can go wrong. Understand how wars, inflation, regulation, market closures, and political shocks can reshape investor outcomes.
- Use history with more caution. Learn how survivorship bias, success bias, and index-quality issues can distort long-run return conclusions.
You might also like:
“Stocks for the Long Run Revisited: Dividends and ‘The Return Nobody Got’” (Paul McCaffrey, CFA Institute Research Foundation, 2026)
Best paired with the book’s discussion of compounding, total return, dividend reinvestment, and the gap between market returns and investor experience.
"Stocks for the Long Run? New Evidence, Old Debates” (Paul McCaffrey, CFA Institute Research Foundation, 2025)
A strong companion to the book’s global and historical sections, especially its caution against overgeneralizing from modern US history.
“The Performance of the 60/40 Portfolio: A Historical Perspective” (Nga Pham, Bei Cui, and Ummul Ruthbah, CFA Institute, 2025)
Useful for applying the book’s evidence to strategic asset allocation, stock–bond correlations, market-specific risks, and the role of alternatives.