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Investment returns on German, Japanese, Russian, Polish, Zimbabwean, Austro-Hungarian stock exchanges since 1910 look pretty awful. More generally you’re assuming away political risk. Once your investments go to zero you’re done. As an investment housing does much better when compared to equities than we thought until recently and it’s less risky. If the Communists come you’re screwed no matter what but if there’s regime change there’s a decent chance you can keep real property, especially if it’s local. > The authors of the aforementioned study — Òscar Jordà, Moritz Schularick and Alan M. Taylor — have constructed a new database for the U.S. and 15 other advanced economies, ranging from 1870 through the present. Their striking finding is that housing returns are about equal to equity returns, and furthermore housing as an investment is significantly less risky than equities. > In their full sample, equities average a 6.7 percent return per annum, and housing 6.9 percent. For the U.S. alone, equities return 8.5 percent and housing 6.1 percent, the latter figure being lower but still quite respectable. The standard deviation of housing returns, one measure of risk, is less than half of that for equities, whether for the cross-country data or for the U.S. alone. Another measure of risk, the covariance of housing returns with private consumption levels, also shows real estate to be a safer investment than equities, again on average. https://www.bloomberg.com/opinion/articles/2019-03-21/buy-a-... |