Long Term Investor…

I am now mired in returns data from Cambridge Associates (U.S. Historical Capital Market Returns 1900 to 2010) and just stumbled across a bunch of fascinating data. Here you go:

  • In 2010 S&P 500 returned 15.1% and bonds returned 12.4%…cash returned 0.1%…apparently the worst cash return since 1940
  • From 1900 to 2010 – yes, for 111 years – equities enjoyed an annual compound rate of return of 9.4% as compared to 5.6% for long-term, high quality corporate bonds
  • For the past 111 years annual inflation was 3.1%
  • If you invested $100 in 1900 in equities you now have $2,232,544
  • And if you invested that same $100 in bonds in 1900, 111 years later you would have $40,400
  • But if you put it in money markets – not sure what that was in 1900 – you would have $8,142

I certainly do not hope nor expect that our venture funds at Flybridge will take 111 years to mature but I have now a new-found respect for the power of compounding equity returns – and backing innovation.

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