Elroy Dimson

It continued till about a year and a half ago.

I mean, once you buy a market which represents more than all the others put together, you can't imagine anything else which is as big.

It's extrapolating to the history that was going to be used for the future.

That's a very difficult extrapolation, and yet we really must look at long-term stock market histories in a variety of different circumstances.

So we can learn by looking at the differing experiences of markets around the world, and not just relying on the US.

Well, the biggest market in the world by market cap in 1900 was Britain.

There were others that were large, Germany, France, and so forth.

What did those stock market valuations reflect?

Well, part of it was the growing network for communications, physical communications in different countries.

So the majority of all of U.S.

common stocks, the majority of all British common stocks by value was railroad stocks.

We had previously had a canal frenzy.

Canals did very well, but they found themselves, I can't even believe I'm just saying this, underwater.

Though within a few decades, railways had come along, and although canals were very efficient compared to lousy ground transport being pulled by a horse and cart, you had the same sort of thing where trains were much better than travelling on canals.

Trains were very important.

I don't think it would have been obvious at the time, once there was a railway boom, that there would be alternatives like trucking or road transport.

There might be alternatives.

But nevertheless, there was a longer period of success for trains.

And in the end, if you stuck with it, railways did quite well, but they went through some very, very difficult periods in the middle of the 20th century.

We look at railway stocks from 1900 going forward.