Elroy Dimson

And that's because there were no government bonds and you would have to settle for corporates or state securities.

Interpreting history also gets to be more difficult the further back you go and requires more and more care.

No, I think they had a pleasant surprise.

It was really in the second half of the 20th century.

People would have expected, I think, extrapolating from their experience before and in the early years of the 20th century,

They would have extrapolated from a world in which companies did business, generated income, the income was paid out as dividends.

Pretty much everything was income driven.

We then moved into the 20th century proper.

At that point, people were making capital gains.

In part, they were making those capital gains because expectations for the future were rosy and what you would get from investing in common stocks was more than just the dividends that were paid out.

You had rising valuations.

That must be something which you talk about and write about in your own business.

The United States in all of this is very tricky.

One other form of survivorship bias is that in the global equity markets, although America was one of several large markets back in 1900, fairly rapidly, it became the biggest one in the world.

It stayed that way with the exception of a very brief period where the Japanese equity market was bigger than many other markets.

And so the US has had this amazing history.

People who are psychologically attuned to the United States have often said that they think that can only continue.

Our expectation was that with 100 very good years from the US, you couldn't expect it to continue.

And Paul and Mike and I were wrong.

It did continue.