Historic global market returns?

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joo2lo
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Joined: Sat Nov 19, 2016 3:28 am

Historic global market returns?

Post by joo2lo » Tue Jan 16, 2018 1:42 am

Just curious... I keep reading that returns of the US stock market averages about 7% historically when adjusted for inflation. I was just curious what the GLOBAL market returns historically were which I’ve read the U.S. comprises 50% of while the other 50% are all other international countries. I was wondering this in regards to setting up an asset allocation where you were 50% U.S. total stock market and 50% international total stock market... What would your expected return over the long run would be estimated at?

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willthrill81
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Re: Historic global market returns?

Post by willthrill81 » Tue Jan 16, 2018 1:46 am

This is the link to the information you want. It's the Credit Suisse report.

From 1900-2016, they report that the real return of U.S. equities was 6.4%. For the entire world, the real return for this time period was 5.1%.

You'll also note that the real returns have varied significantly across different time periods.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

mrpotatoheadsays
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Re: Historic global market returns?

Post by mrpotatoheadsays » Tue Jan 16, 2018 2:00 am

Jeremy Siegel's research concluded the risk associated with stocks is consistent across the globe. Therefore, the historical 7% real return based on some US benchmark would be achievable on a similar non-US benchmark. However, with non-US assets you have the additional risk of currency fluctuation.

fennewaldaj
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Re: Historic global market returns?

Post by fennewaldaj » Tue Jan 16, 2018 2:02 am

Interestingly for a lot of people the higher US than ex US returns lead them to thinking international diversification is bad. It leads me to the opposite conclusion. The US was the winner in the 20th and early 21st century. It may or may not be in the next 30-70 years. Given that I am much more inclined to take the world returns whatever they may be.

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