Source: The Economist
A decade since the U.S. subprime crisis began, and everything’s wonderful on Wall Street
A decade after the world began to notice the losses on derivatives linked to the toxic waste of structured subprime mortgages, American stocks have produced such big returns that the biggest crash in generations barely registers.
The 10-year average compound return on U.S. shares was 4.9% a year after inflation at the start of 2016, only slightly below the average for world stocks since the end of the Gilded Age in 1900, according to calculations for Credit Suisse by Elroy Dimson,Paul Marsh and Mike Staunton of London Business School.
The same isn’t true for the rest of the world. British stocks made only 3% after inflation, including dividends, in the past decade, while real Japanese returns were barely positive and French shares delivered less than 2%. German stocks weren’t quite so bad thanks to its export powerhouses, and their 4.3% return adjusted for inflation is in line with the very long-term return from the world outside the U.S.
This global divergence is covered up by the record highs of global stocks in the past week. On Wednesday morning in London the MSCI All-Country World index was setting another new high after breaking the 2015 high a week ago. Den Rest des Beitrags lesen »