It has become an annual tradition here at Abnormal Returns to make a big stinking deal out of the release of the latest edition of the Credit Suisse Global Investment Yearbook. See posts from 2018, 2017, 2016, 2015, 2014, 2013 and 2012. Like last year, the yearbook is now only available online in a summary version.
For those of you not aware, the authors of this document, Elroy Dimson, Paul Marsh and Mike Staunton, are also the authors of the well-received Triumph of the Optimists: 101 Years of Global Investment Returns. So the 2019 Credit Suisse Global Investment Yearbook is an updated, but abbreviated, version of the book.*
I just wanted to highlight a couple of things from this year’s Global Investment Returns Yearbook. The first section of the yearbook looks at the role that emerging markets play in the global financial markets. They note one of things holding back the impact of emerging markets is the fact that these markets have smaller free floats than developed markets. They authors then go into a deep dive into the dynamics of the Chinese stock market.
The next section takes a look at some really long term, return data. For example, did you know that at the start of 1900, the UK was by far and away the largest equity market in the world clocking in at 25%? The US was then in second place at 15%. 120 years later the US now makes up 53% of global equity market cap. Even more stunning is the dramatic shift in industry concentration over this time period. The stock market in the US (and the UK) in 1900 was a majority of rail stocks. Today that mix is far more diverse.
The value of a document like the Global Investment Returns Yearbook isn’t that is some sort of roadmap for the returns. Instead it gives us a better sense for where we have been. Over the past couple of centuries a lot has happened, including two horrific World Wars, that have upended and reshuffled the global economy and financial markets.
*I am not including any charts from the yearbook this year. They all have a prominent copyright message attached. That being said, I get why Credit Suisse makes the full version of the book only available to clients, but I think they are making a mistake by restricting access. The global investment yearbook is a great service not only to investment professionals but to students as well. I think this a missed opportunity. Full stop.