Hi There !

How much would $1 invested in stocks around the year 1800 be worth today?
What approximate percent return per year would that be over that ~200 years?

Approximate numbers would be fine.

Thanks a million !
ron

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Request for Question Clarification by pinkfreud-ga on 30 May 2004 17:47 PDT

Hi, Ron! Let me run this up the flagpole to see if anyone salutes...

"Over the long-term, stocks perform best. Let's look at a few
historical numbers. The ones I use below are taken from the book
Stocks for the Long Run, by Jeremy Siegel, a business professor at the
Wharton School at the University of Pennsylvania.

Professor Siegel studied how stocks and other investment options (such
as bonds and gold) performed over almost 200 years. He found that
stocks fared best. To prove his point, he looked at what happened to a
single dollar if it was invested in 1802 (only three years after
George Washington died) in stocks, short-term bonds, long-term bonds,
and gold. The results are impressive. In 190 years, the single dollar
grew to the following sizes:

Stocks:             $3,050,000
Long-term bonds:        $6,620
Short-term bonds:       $2,934
Gold:                      $13"

The Motley Fool
http://www.fool.com/teens/FamilyCollection980325stocks2.htm

Adjusting for inflation makes these figures slightly less astounding,
but my jaw is still dropping:

"Of the two gentlemen, Siegel was the most fun to listen to: Everyone
likes the thought of getting rich. An ebullient speaker, he lays out
an optimistic case for stocks. One dollar invested in stocks back in
1801 would be worth an inflation-adjusted $597,000 today, assuming
dividends were reinvested and no taxes were paid. A dollar invested in
bonds would be worth $1,072 and T-bills $301. Gold bugs take heed: A
dollar invested in gold, adjusted for inflation, would be worth a mere
$1.37 today. And a dollar invested in dollars -- U.S. currency --
would be worth a nickel and two pennies."

Bacon's Rebellion
http://www.baconsrebellion.com/Issues04/01-19/Dueling_gurus.htm

Jeremy Siegel's website offers an interesting chart for the price of
$10 (you have to be a member of the site in order to view this page):

Total Nominal Returns Index, 1802-2001 
Tracks total appreciation of $1 in stocks, bonds, bills, gold, and the
U.S $ over the period 1802-2001
Price: $10.00

Jeremy Siegel
http://www.jeremysiegel.com/members/product.asp?t=4

Am I barking up the right tree?

---

Clarification of Question by nronronronro-ga on 30 May 2004 17:54 PDT

PinkFreud,

You are brilliant!  Or as Texans say, you could talk a dog off a meat wagon.
Please post as an answer so I can pay you.

Thanks!!!
ron

I'm glad to have been able to help! I've reposted the material below.

"Over the long-term, stocks perform best. Let's look at a few
historical numbers. The ones I use below are taken from the book
Stocks for the Long Run, by Jeremy Siegel, a business professor at the
Wharton School at the University of Pennsylvania.

Professor Siegel studied how stocks and other investment options (such
as bonds and gold) performed over almost 200 years. He found that
stocks fared best. To prove his point, he looked at what happened to a
single dollar if it was invested in 1802 (only three years after
George Washington died) in stocks, short-term bonds, long-term bonds,
and gold. The results are impressive. In 190 years, the single dollar
grew to the following sizes:

Stocks:             $3,050,000
Long-term bonds:        $6,620
Short-term bonds:       $2,934
Gold:                      $13"

The Motley Fool
http://www.fool.com/teens/FamilyCollection980325stocks2.htm

Adjusting for inflation makes these figures slightly less astounding,
but my jaw is still dropping:

"Of the two gentlemen, Siegel was the most fun to listen to: Everyone
likes the thought of getting rich. An ebullient speaker, he lays out
an optimistic case for stocks. One dollar invested in stocks back in
1801 would be worth an inflation-adjusted $597,000 today, assuming
dividends were reinvested and no taxes were paid. A dollar invested in
bonds would be worth $1,072 and T-bills $301. Gold bugs take heed: A
dollar invested in gold, adjusted for inflation, would be worth a mere
$1.37 today. And a dollar invested in dollars -- U.S. currency --
would be worth a nickel and two pennies."

Bacon's Rebellion
http://www.baconsrebellion.com/Issues04/01-19/Dueling_gurus.htm

Jeremy Siegel's website offers an interesting chart for the price of
$10 (you have to be a member of the site in order to view this page):

Total Nominal Returns Index, 1802-2001 
Tracks total appreciation of $1 in stocks, bonds, bills, gold, and the
U.S $ over the period 1802-2001
Price: $10.00

Jeremy Siegel
http://www.jeremysiegel.com/members/product.asp?t=4

You may want to read Jeremy Siegel's book, "Stocks for the Long Run."
It's a classic that has been updated recently:

Amazon.com
http://www.amazon.com/exec/obidos/tg/detail/-/007137048X/qid=1085965616

Since I was aware that Professor Siegel had discussed this subject,
but was uncertain of exactly what year in the early 1800s he used as a
starting point, this was the search string that gave me the best
results:

Google Web Search: "dollar" + "invested" + "1800..1810" + "siegel"
://www.google.com/search?hl=en&ie=UTF-8&q=dollar+invested+1800..1810+siegel

Google has a very interesting, but little-known feature: a search like
the one above will match all numbers within the range listed. So this
search picked up references that mentioned 1800 through 1810. Gee, I
love Google.

Best,
Pink

Top-notch effort.  Pristine work !

Thanks, Pink.
ron

I wonder if Seigel factored in the stocks that became valuless (or
almost valuless) due to fraud, because of war, nationalizing of
corporations, acts of God the 1929 stock market crash and/or massive
inflation. Were new offerings included, and foreign stocks? Were small
stocks weighted so not to be negligible compaired to the biggest
corporations?    Neil

Thanks, Neil !    I always appreciate your comments.

ron