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The Rate of Return on Everything, 1870–2015 (2019)

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Re: The Rate of Return on Everything, 1870–2015 (2019)

#31

Post by throw0101d »

If anyone wants to download the data, it's available at:

> The Jordà-Schularick-Taylor Macrohistory Database is the result of an extensive data collection effort over several years. In one place it brings together macroeconomic data that previously had been dispersed across a variety of sources. On this website, we provide convenient no-cost open access under a license to the most extensive long-run macro-financial dataset to date. Under the Terms of Use and Licence Terms below, the data is made freely available, expressly forbidding commercial data providers from integrating, in addition to any existing data they may already provide, all or parts of the dataset into their services, or to sell the data.

* https://www.macrohistory.net/database/

See also perhaps "Historical Returns on [US] Stocks, Bonds and Bills: 1928-2023" (updated annually AFAICT):

* https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...

There's also the The Credit Suisse Global Investment Returns Yearbook:

> The Credit Suisse Global Investment Returns Yearbook is the authoritative guide to historical long-run returns. Published by the Credit Suisse Research Institute in collaboration with London Business School, it covers all the main asset categories in 35 countries. Most of these markets, as well as the world index have 123 years of data since 1900.

* https://www.credit-suisse.com/about-us-news/en/articles/medi...

* https://www.credit-suisse.com/about-us/en/reports-research/s...

As well as:

> The Global Investment Returns Yearbook, an authoritative guide to historical long-run returns, launched by UBS Investment Bank Research and UBS Global Wealth Management’s Chief Investment Office. This edition demonstrates the combined strength of UBS and Credit Suisse as the integration of the two banks progresses, and also marks the continuity of a longstanding relationship with the authors, Professor Paul Marsh and Dr Mike Staunton of London Business School and Professor Elroy Dimson of Cambridge University.

* https://www.ubs.com/global/en/investment-bank/in-focus/2024/...

Re: The Rate of Return on Everything, 1870–2015 (2019)

#32

Post by [deleted] »

betaby wrote: post #10
idiotsecant wrote: post #5

Earlier quoted context omitted.

I wonder if this is still true once population growth reaches zero or negative. It seems like the baked in assumption of housing is that someone else is going to need it more tomorrow than you do today. I think this is an experiment the U.S. will begin running in earnest in the near future.

That if won't happen anytime soon neither for the Earth in general nor USA in particular. Media often loves to move goals from population growth to agin g population to fertility rate, etc. All those while connected do not negate the fact that population is growing, and growing fast. That 'once population growth reaches zero or negative' is very theoretical and UN is constantly underestimating population growth. So n…

[deleted]

Re: The Rate of Return on Everything, 1870–2015 (2019)

#34

Post by mensetmanusman »

smath wrote: post #33

Doesn’t this contradict Robert Shiller who shows that housing returns are flat in the long term?

Housing prices may collapse over the next 50 years as the population pyramid inverts and buyers demand decreases due to fewer individuals. What is the definition of long-term though?

Re: The Rate of Return on Everything, 1870–2015 (2019)

#35

Post by mensetmanusman »

superb_dev wrote: post #9

How can an entire economy have a growth rate? Is it not measuring how much "new money" was put into the system?

An economy is simply the number of people times the average productivity per person.

If lots of people are doing a lot of work powered by a lot of energy and productive technology equipment, the (material) economy is good.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#36

Post by bluGill »

_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

right out of adam smith, when people get more money they typically spend it on better housing.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#37

Post by mensetmanusman »

bombcar wrote: post #17
pineaux wrote: post #2

So basically, housing is the best investment vehicle based on all the numbers.

Housing is only a true investment vehicle if you count all the costs. Even bare land has to be maintained somewhat. You can't just subtract purchase price from sale price and call it done.

Yeah, it would be interesting to have more transparent costs, especially with inflation. New siding every 20 years is $40k, a new roof might be $30k every 25 years, a new driveway, etc.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#38

Post by kccqzy »

smath wrote: post #33

Doesn’t this contradict Robert Shiller who shows that housing returns are flat in the long term?

That calculation does not factor into the rent you will not pay when you buy a house and live in it. Imputed rent is a thing and you need to consider it. If you don't live in the house you wouldn't let the house sit vacant: you would rent it. In your formula the rent can be thought of as if it's a dividend of the investment.

Alternatively just read the linked article; the linked article makes the correct fair comparison. You will arrive at that conclusion by reading just the second paragraph, which says

> data on total housing returns (price appreciation plus rents) has been lacking (Shiller 2000 provides some historical data on house prices but not on rents). In this article we build on more comprehensive work on house prices (Knoll, Schularick, and Steger 2017) and newly constructed data on rents (Knoll 2017) to enable us to track the total returns of the largest component of the national capital stock.

Shiller is explicitly mentioned. And the article authors disregarded it because it failed to include rent.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#39

Post by mensetmanusman »

betaby wrote: post #10
idiotsecant wrote: post #5

Earlier quoted context omitted.

I wonder if this is still true once population growth reaches zero or negative. It seems like the baked in assumption of housing is that someone else is going to need it more tomorrow than you do today. I think this is an experiment the U.S. will begin running in earnest in the near future.

That if won't happen anytime soon neither for the Earth in general nor USA in particular. Media often loves to move goals from population growth to agin g population to fertility rate, etc. All those while connected do not negate the fact that population is growing, and growing fast. That 'once population growth reaches zero or negative' is very theoretical and UN is constantly underestimating population growth. So n…

China loses 300 million in the next century, we will start witnessing the impact before we die.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#40

Post by carlosjobim »

sdwr wrote: post #26
_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

Housing has elastic demand, right? Based on prices, you can have roommates, children can live with parents, etc. Real housing costs could double tomorrow, and people would survive (not happily).

With extreme consequences to the population. When people are not given space to create their own families, the result is the massive population decrease we're living through now in industrialised nations.
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