Esrati on the Financial Crisis in video

. These long-term data cover solely the ficnnaial markets of the United States. (Most studies show that stocks in other nations have provided lower returns and far higher risks.) In the early years, the data are based on fragmentary evidence of returns, subject to considerable bias through their focus on large corporations that survived, and derived from equity markets that were far different from today’s in character and size (with, for example, no solid evidence of corporate earnings comparable to those reported under today’s rigorous and transparent accounting standards). The returns reported for the early 1800s were based largely on bank stocks; for the post-Civil War era, on railroad stocks; and, as recently as the beginning of the twentieth century, on commodity stocks, including several major firms in the rope, twine, and leather businesses. Of the 12 stocks originally listed in the Dow Jones Industrial Average, General Electric alone has survived. In other words, nobody would have been lucky enough to pick and sell the right stocks and bonds to achieve the returns shown in that chart. If you had thrown all of your money into a diverse collection of stocks and bonds 200 years ago, nearly all of the corporations in your portfolio would now be bankrupt or dead.