Stocks for the long run? Evidence from a broad sample of developed markets

Aizhan Anarkulova, Scott Cederburg and O’Doherty, Michael S.

Journal of Financial Economics, 2022, vol. 143, issue 1, 409-433

Abstract: We characterize the distribution of long-term equity returns based on the historical record of stock market performance in a broad cross section of 39 developed countries over the period from 1841 to 2019. Our comprehensive sample mitigates concerns over survivor and easy data biases that plague other work in this area. A bootstrap simulation analysis implies substantial uncertainty about long-horizon stock market outcomes, and we estimate a 12% chance that a diversified investor with a 30-year investment horizon will lose relative to inflation. The results contradict the conventional advice that stocks are safe investments over long holding periods.

Keywords: Long-horizon stock returns; Loss probability; Survivor bias; Easy data bias (search for similar items in EconPapers)
JEL-codes: C58 G10 G11 G12 G15 N20 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:143:y:2022:i:1:p:409-433

DOI: 10.1016/j.jfineco.2021.06.040

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