Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Welcome back to Patrick Boyle on finance. We talk quite a bit about the stock market, how to invest,

and market history around here. So a logical question for us to answer is what were the best

long-term investments over the last hundred or so years? The world was quite a different place

in 1900. Elon Musk had not yet invented the electric car, the train, or even the tunnel.

Now, when I did my master's degree at London Business School,

I was very lucky to study with Alroy Dimson,

who's probably one of the greatest experts in the world

on the topic of long-term investing returns.

So let's look at what we can learn from his research

on global markets and asset classes

and from the research of Hendrik Bessambinder

from Arizona State University on single stock returns.

Stay to the end for the list of the 10 best performing stocks since 1926.

Okay, so let's start with Dimson Marsh and Staunton of London Business School, who every year

in association with Credit Suisse released the Credit Suisse Global Investment Returns Yearbook,

which analyzes global market returns since 1900.

The 2020 edition gives us the insights gleaned from examining 120 years of global markets data.

The team look at stocks, bonds, bills, inflation and currency for 23 national markets and for the world as a whole.

In the last 120 years, investments in stocks have given investors the best long-term

investment returns, solidly beating fixed income investments. Over this period, global equities

provided an annualized real or inflation-adjusted return of 5.2% versus 2% for bonds and 0.8% for short-term fixed income investments,

...