Section 2 presents the book’s 100-year record of US market performance. Using the new Ibbotson Equity and Bond data set, it documents the 1926–2025 performance of US stocks, Treasuries, bills, and inflation, while also examining drawdowns, bubbles, yields, bond returns, and the equity risk premium.
This section of Exponential Wealth: Centuries of Stock and Bond Returns shows the scale of long-term equity wealth creation: From 1926 to 2025, $1 invested in US large-cap stocks grew to $14,751 and $1 invested in small-cap stocks grew to $32,425. By comparison, $1 invested in long-term Treasury bonds grew to $117, $1 in 30-day Treasury bills grew to $25, while inflation rose 18-fold. By looking beyond average returns to volatility, crashes, cycles, and risk premiums, Section 2 seeks to help readers understand US capital market history and set return expectations without treating past success as a guarantee.
At a Glance
- This section rebuilds the 100-year US market record. Section 2 uses the new Ibbotson Equity and Bond data set to examine US capital markets from 1926 to 2025.
- It shows how US equities created wealth. It documents extraordinary long-run stock growth while making clear that investors had to endure volatility and drawdowns.
- It compares stocks, bonds, bills, and inflation. It shows how major US asset classes played different roles over a full century.
- It looks beyond average returns. It examines bubbles, crashes, market cycles, drawdowns, and extreme events.
- It grounds return assumptions in evidence. Section 2 helps readers evaluate capital market assumptions, equity risk premium estimates, and bond return expectations.
What Is Section 2, "The Past 100 Years in US Markets," About?
Section 2 gives readers the core US evidence base for long-run capital market analysis. It shows how major US asset classes performed over the past century, how equity wealth was created, how bonds and bills behaved, and how inflation, drawdowns, bubbles, yields, and risk premiums shaped investor outcomes.
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Who Should Read Section 2?
Section 2 is for investors, advisers, asset allocators, portfolio analysts, risk professionals, and investment committees that rely on US market history to set expectations. It is especially useful for readers who need evidence on US equities, Treasuries, bills, inflation, drawdowns, yields, and bond return methodology, as well as the equity risk premium, to inform allocation, risk, and return assumptions.
Why Is This Section Important?
Section 2 is important because it provides the book’s evidence base for understanding modern US capital market history. It helps readers see both the power and the limits of the US historical record. US equities created extraordinary long-term wealth, but that success came with volatility, crashes, and long recovery periods. Section 2 therefore helps investors and practitioners use US market history as essential evidence for setting expectations, without treating past performance as a guarantee of future results.
What You Will Learn from Section 2
- See what 100 years of US markets delivered. Learn how stocks, bonds, bills, and inflation performed from 1926 to 2025 using the new Ibbotson Equity and Bond data set.
- Understand the power — and pain — of equity investing. See how US equities created extraordinary long-run wealth, despite going through volatility, crashes, drawdowns, and long recovery periods.
- Compare the roles of stocks, bonds, bills, and inflation. Learn how each asset class contributed differently to growth, income, stability, and real purchasing power.
- Use history more carefully. Learn how the 100-year US record can inform asset allocation, bond assumptions, and equity risk premium estimates — without treating past success as a guarantee.
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