Exponential Wealth: Centuries of Stock and Bond Returns examines how stock and bond markets have created long-term wealth — and why that wealth is difficult to capture. Building on the Stocks, Bonds, Bills, and Inflation (SBBI) legacy, the book introduces the Ibbotson Equity and Bond Indices as a successor dataset designed to continue the long-run record beginning in 1926 and help frame future expectations.
The book’s central lesson is that long-run markets can create extraordinary wealth but only for investors who understand total return, reinvest income, diversify broadly, manage costs and inflation, and use history with discipline. The compounding effect is dramatic: Over 1926–2025, $1 invested in US large-cap stocks grew to $14,751, and $1 invested in small-cap stocks grew to $32,425.
Exponential Wealth is organized into four sections: an overview of stock and bond returns (Overview of Stock and Bond Returns); the past 100 years of US markets using the new Ibbotson Equity and Bond data set (The Past 100 Years in US Markets); US data before 1926 and global markets over multiple centuries (Centuries of US and Global Returns); and historical data used to help predict future returns (The Future). Together, these sections move from the foundations of wealth creation to the evidence needed to understand the past and think carefully about the future.
At a Glance
- The book renews a foundational dataset. It marks the 50th anniversary of the original SBBI articles and introduces the Ibbotson Equity and Bond Indices as a successor to the discontinued SBBI data series.
- The book explains how long-term wealth is created. It shows how total return, reinvestment, inflation, risk premiums, and compounding shape stock and bond outcomes over long horizons.
- The authors analyze 100 years of US market history. The book examines US capital markets from 1926 to 2025 using the new Ibbotson Equity and Bond dataset.
- It places the US record in broader context. It compares the modern US experience with pre-1926 US data and capital market returns across countries and centuries.
- It connects history to future expectations. It uses historical evidence to frame future stock and bond return forecasts while emphasizing uncertainty and the limits of extrapolating from the past.
What Is the Exponential Wealth Book About?
The book explains how long-run capital market returns become wealth and why that process is harder to capture than it looks. It combines the modern US stock and bond record with earlier US evidence, global market histories, and forward-looking return forecasts. It delivers a disciplined framework for understanding total return, risk premiums, compounding, inflation, diversification, and the limits of assuming that past US outcomes will automatically repeat.
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Who Should Read This Book?
Investment professionals, researchers, advisers, asset allocators, valuation specialists, and students who rely on long-run capital market evidence should read this book. They will find it especially useful if they build portfolios, estimate expected returns, study market history, teach finance, evaluate risk premiums, or need to place the modern US experience in broader global and multi-century context.
Why Is This Book Important Now?
This book matters now because a foundational source of long-run capital market data is being renewed. The original SBBI series helped define how investors, advisers, and researchers understood returns, inflation, compounding, and risk premiums. With the legacy indices discontinued, Exponential Wealth introduces the Ibbotson Equity and Bond Indices and places the 100-year US record in broader global and historical context.
What You Will Learn
- See how markets build wealth. Learn how total returns, reinvested income, and compounding turn long-run stock and bond returns into powerful engines of wealth creation.
- Understand what investors had to endure. Learn why capturing market returns requires patience, diversification, cost control, tax awareness, and the ability to stay invested through difficult markets.
- Put the US record in context. Learn why the past 100 years of US market success should be compared with earlier US history and global markets across centuries.
- Use history without worshipping it. Learn how long-run data can inform future expectations, risk premiums, and forecasts — without assuming the past will repeat.
The Sections and Contributing Authors
Section 1. Overview of Stock and Bond Returns
Authors:
Roger G. Ibbotson, PhD (Yale School of Management; Zebra Capital Management, LLC)
Laurence B. Siegel (CFA Institute Research Foundation)
Thomas M. Idzorek, CFA (Morningstar)
James P. Harrington (Kroll)
Section 2. The Past 100 Years in US Markets
Authors:
Roger G. Ibbotson, PhD (Yale School of Management; Zebra Capital Management, LLC)
Otto S. Manninen (Yale School of Management)
William N. Goetzmann, PhD (Yale School of Management)
James Tyler (Bridgewater Associates)
Thomas S. Coleman, PhD (University of Chicago)
Laurence B. Siegel (CFA Institute Research Foundation)
Carla S. Nunes, CFA (Valuation Research Corporation)
Section 3. Centuries of US and Global Returns
Authors:
Edward F. McQuarrie, PhD (Santa Clara University)
Elroy Dimson, PhD (Cambridge Judge Business School)
Paul Marsh, PhD (London Business School)
Mike Staunton, PhD (London Business School)
William N. Goetzmann, PhD (Yale School of Management)
Fernando Reyes De La Luz (Yale School of Management)
K. Geert Rouwenhorst, PhD (Yale School of Management)
Rajkumar Janardanan (SummerHaven Investment Management)
Xiao Qiao, PhD (City University of Hong Kong)
Tadaaki Komatsubara (Ibbotson Associates Japan, Inc.)
Peng Chen, PhD, (Morningstar China)
Bryan Taylor, PhD (Finaeon, Inc.)
David Chambers, PhD (Cambridge Judge Business School)
Antti Ilmanen, PhD (AQR Capital Management)
Paul Rintamäki (Frankfurt School of Finance and Management)
Authors:
Thomas M. Idzorek, CFA (Morningstar)
Roger G. Ibbotson, PhD (Yale School of Management; Zebra Capital Management, LLC)
Paul D. Kaplan, PhD, CFA (Morningstar Canada)
William N. Goetzmann, PhD (Yale School of Management)
Otto S. Manninen (Yale School of Management)
You might also like:
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.
Revisiting the Equity Risk Premium(Laurence B. Siegel and Paul McCaffrey, CFA Institute Research Foundation, 2023)
Highly relevant to the book’s chapters on the equity risk premium and its forward-looking forecast discussion.
Estimating Long-Term Expected Returns (Rui Ma, Ben R. Marshall, Nhut H. Nguyen, and Nuttawat Visaltanachoti, Financial Analysts Journal, vol. 80, no. 4, 2024)
A strong methodological companion to Section 4, especially for estimating 10- and 20-year expected returns using yield, growth, and valuation.