Stocks for the Long Run

Thinker number 10, Jeremy Siegel.

Siegel is the author of Stocks for the Long Run, which is one of the most widely cited books in investment history.

His central argument, backed by nearly two centuries of data, is that stocks, over long time horizons, have been the superior asset class.

Not every year, not every decade, but over the kind of time horizons that matter for retirement savings, stocks have consistently delivered real returns that bonds simply cannot match.

This might be one of my favorite calendar anomalies.

Jeremy Siegel, I think I'm getting his name right, wrote the classic Stocks for the Long Run, where he analyzes a bunch of these.

Most of them have been arbitraged out.

So like the January effect where you essentially, you know, everyone's doing tax loss harvesting in December and then everyone's buying their stocks back in January.

I keep mentioning books.

Jeremy Siegel, Stocks for the Long Run.

Classic.

book about why you should commit capital to equities over time.

In one of the earlier editions, it's not in the most recent edition of Stocks for the Long Run, but in one of the earlier editions, he did a study of companies that had demonstrated the ability to grow their revenues, their sales at between 5% and 8% per annum.

Not very rapidly, not very exciting, but just a persistently grown 5% to 8% per annum.

And he worked out on a post hoc basis, scientific statistical basis, that companies that have got the ability to grow in that steady, remorseless compounding rate deserve price earnings ratios of 30 or 40 times earnings.