When Will the Music Stop on Wall Street?

???Our study reveals that the risk-takers who optimistically invested in equities [the stock market] were the group who triumphed in the long run.???

— ???Triumph of the Optimists??? (2002), p. xi.

I asked Jeremy Siegel last week if anyone has written a book on foreign stock markets similar to his classic book, ???Stocks for the Long Run.??? In his work, the Wizard of Wharton showed that U.S. stocks had sustained a long-term upward trend since 1802, despite devastating wars, depressions and bank panics. In other words, it pays to be a bull.

Siegel told me that a similar study was done on foreign stocks called ???Triumph of the Optimists: 101 Years of Global Investment Returns,??? by three British professors at the London Business School. They demonstrated that in all 16 countries (primarily in Europe and North America) in their survey, stocks outperformed bonds and gold over the long term and enjoyed a long-term upward trend during the 20th century — despite two world wars, the Great Depression, runaway inflation, currency crises and other unstable conditions. See the chart below.

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