The 10% annual return has a passport

1The number with its surnames

US equities offer a story of extraordinary returns. The first task is to read it accurately, without diminishing it or dressing it up as an oracle.

The table does not set one source against another. Each series gives its own name to the same broad story. What it does correct is the habit of calling everything “10%”: an index price, the dividends it pays, the purchasing power it preserves, and the experience of holding an investment.

In Shiller’s series, the same history changes shape when seen through three windows. Nominal total return includes reinvested dividends and has not yet been adjusted for inflation. Real total return answers a purchasing-power question. Real price makes visible how much of the work came from reinvested distributions. They are three answers to three questions a saver already has.

2A country inside the word “market”

Saying “the stock market” often removes the country inside the phrase. And the country matters. At the beginning of 2026, the United States represented about 62% of global equity market value according to UBS/DMS. A global index brings together many companies, sectors, and geographies; its center of gravity is strongly shaped by the United States.

National concentration is an exposure worth naming. For much of the twentieth century, US concentration gathered productivity, market depth, entrepreneurial capacity, and an institutional framework that allowed capital to keep compounding. The result deserves admiration. The practical lesson is more sober: every country concentration buys part of that country’s future history.

History offers extreme examples. In its historical series, UBS/DMS applies a total-loss convention to the Russian domestic index in 1917 and the Chinese domestic index in 1949; Shanghai’s stock market closed then and the current exchange began in 1990. These are regime changes that make country risk visible inside an asset class called “equities.”

3What the data let us see

Abraham Wald’s parable retains its force because it invites us to examine a sample before reaching a conclusion. Wald studied how to infer aircraft vulnerability from the planes that returned. Applied to markets, the question is equally simple: which histories reach our charts whole, and which arrive in fragments?

Jorion and Goetzmann assembled 39 markets to study that question internationally. Their Table I brings together annual real-price appreciation rates, with national periods of different lengths. The United States recorded 4.32% per year from 1921 to 1996; the median across the 39 markets was 0.75%. The study’s GDP-weighted world price index, built with all markets and losses imputed for some permanent breaks, reached 4.04%. A country median and a weighted world portfolio tell different stories, and both add context.

The second figure turns that Table I into a view of the whole: a map of national outcomes, rather than a winners’ podium. What appears beside each country is a historical real-price rate; what appears between the bars is the distance between national histories we often pack into one word, “market.”

4The long run has a calendar too

An annualized return is a photograph taken from far away. An investor lives the journey: the entry month, contributions, expenses that keep arriving, and the years when patience ceases to be an elegant word.

The US series is enough to see this. The third figure takes three entry months: September 1929, December 1968, and August 2000. From each, it follows two measures—real total return and real price—and two different moments: the first return to entry value, and the point after which the series never falls below it again within the sample.

The December 1968 entry tells the story better than any average. With dividends reinvested, the starting real value was first recovered in November 1972. Further declines followed: only from August 1984 did it stay above that level through December 2025. “Recovered in four years” would have been too flattering a snapshot of what that investor lived through.

That contrast has a simple use. Reinvested dividends change the time a reader experiences as recovery; the difference between touching a level and holding it changes the story of the journey.

5Thirty years are not one thing

Thirty years sound like a solid unit of time. In a life, they are a working career. In a monthly series, they are many possible windows.

The fourth figure runs through 1,152 monthly 30-year windows in the United States. Real total return finished above zero in all 1,152. Real price finished below zero in 153. The contrast points to the same fact from another direction: total return and price are not synonyms, even when the horizon is very long.

Research by Anarkulova, Cederburg, and O’Doherty opens another window: a historical simulation of developed domestic markets. Using the same resampling method, it estimates a 12.1% chance of ending below inflation after 30 years for a diversified investment within one domestic market, versus 1.2% when the inference is limited to the United States. The comparison shows how much the conversation changes when the historical map changes.

6What to do with such a good story

The conclusion is to stop using an orphaned number. The price at which the journey begins matters too. In Shiller's US series, windows starting at a lower CAPE tended to deliver a higher real total return over the following decade: the median was 10.7% a year in the cheapest starting-valuation fifth, versus 4.4% in the most expensive. Outcomes in the two groups overlap; CAPE informs a conversation about expectations, not an entry or exit date.

A sensible portfolio can begin with four simple decisions:

1. Plan with ranges. A historical return helps imagine scenarios; it does not turn the strongest known past into the budget of a lifetime.
2. Separate price from total return. Goals are paid for with purchasing power, and dividends have been a material part of the equity experience.
3. Diversify across countries as well. The task is to keep one national story from holding veto power over every goal.
4. Design for one’s own calendar. Liquidity, horizon, contributions, and rebalancing turn a long-term idea into a plan a person can live with.

The number needs a country, a measure, a horizon, and a starting point. With those four surnames it is much more useful than a promise repeated by rote.

7Closing: back to London

Return to the imagined investor in London. Her task was to choose without knowing the century ahead. Ours is closer than it seems: we choose with an extraordinary American history already written, but with the next national history still blank.

That remains true. Today we have more data; the temptation is to use them as proof that the winning country arrives already labeled. The US 10% annual return deserves to be in the conversation because it was real. It also deserves its surnames: total return, United States, history.

Equities can remain one of the most powerful tools for participating in economic growth. A tool is used better when we know which part of its return came from businesses, which part from time, and which part from country.

8Method notes

1. Two US reconstructions. Shiller runs from 1900-01 to 2025-12 with monthly data; UBS/DMS publishes its own 1900–2025 series. Index, deflator, dates, and total-return construction differ, so 10.03%/6.84% and 9.8%/6.6% are not interchangeable figures.
2. Figure 1. The scale is logarithmic. Nominal total return, real total return, and real price use different measures; none represents an ETF, individual costs, taxes, or withholding.
3. Historical markets. In DMS, the domestic Russian portfolio in 1917 and Chinese portfolio in 1949 receive total-loss treatment for the historical index. The authors recognize possible exceptions for companies with foreign assets; this describes the index, not every individual security.
4. Figure 2. The visualization uses the rates published in Jorion and Goetzmann’s Table I, rather than a new calculation over a working file. An asterisk identifies a bridged series and a plus sign a permanent discontinuity; national periods have different lengths.
5. Jorion–Goetzmann. The 4.32%, 0.75%, and 4.04% values are real price appreciations without dividends, over different universes and weightings. A national median is not an investable world portfolio.
6. Figure 3. The chart shows the first later month that reaches the real entry value and the first month from which the series remains above it through the December 2025 sample close. For the 1968-12 entry, the first real-total-return cross is 1972-11; the last month below is 1984-07. “Sustained” means sustained within this sample, not forever.
7. Figure 4 and Anarkulova et al. The 1,152 US windows overlap; they describe a historical sample and do not create 1,152 independent experiments or a future probability. Anarkulova et al.’s 12.1% and 1.2% come from their resampling, with a different universe and method; they are not global-portfolio results.
8. Figure 5: CAPE. The 1,392 monthly US windows from 1900–2015 overlap and are not independent observations. They are grouped into quintiles by starting CAPE; the outcome is annualized real total return over the next ten years. In this sample, the correlation between starting CAPE and subsequent return is -0.499 (R² of 24.9%). December 2025 CAPE (39.58) is a dated reference, not a prediction. Campbell and Shiller study the relationship between valuation and later returns.

Sources

• UBS Global Investment Returns Yearbook 2026 — Public summary
• UBS Global Investment Returns Yearbook 2024 — Public summary
• Jorion and Goetzmann, “Global Stock Markets in the Twentieth Century”
• Anarkulova, Cederburg, and O’Doherty, “Stocks for the Long Run? Evidence from a Broad Sample of Developed Markets”
• Robert J. Shiller historical data and CAPE
• Campbell and Shiller, “Valuation Ratios and the Long-Run Stock Market Outlook”
• CNA reprint of Abraham Wald’s memoranda
• Shanghai Stock Exchange institutional history