See how a dollar would have grown over the past 94 years [pdf]

Small-cap premium and chart presentation

• Many were surprised by small-cap stocks’ outperformance; several noted it mostly stems from a big 1970s–80s divergence, with lines roughly parallel otherwise.
• Some cited an ongoing debate about whether the small‑cap premium still exists (e.g., “SMB size factor”) and suggested recent underperformance may be cyclical.
• There was disagreement on the semi‑log Y axis: some called it “misleading,” others argued log scale is exactly what you want for long‑run percentage returns and any linear chart would be worse.

Bonds vs stocks, “risk‑free,” and time horizons

• A personal anecdote (30‑year government bonds vs equities) spurred debate about what “risk‑free” means.
• One side: government bonds are minimal‑default‑risk and were a reasonable choice ex‑ante; hindsight comparisons to stocks are misleading.
• Counterpoint: over multi‑decade horizons, diversified equities historically have a lower chance of real loss; bond “safety” is eroded by inflation and rate risk, especially when yields are low.
• Others stressed that risk reduction via time only really applies to diversified portfolios, not single stocks.
• There was detailed back‑and‑forth on whether 1990–2020 bonds actually “lost to inflation”; one commenter numerically argued they did not, even after tax, while another focused on taxes, inflation measurement issues, and bond‑ETF quirks.

International diversification and survivorship

• One commenter claimed most non‑US exchanges have been flat/negative for decades; this was strongly disputed with examples of many countries having long‑run positive real equity returns.
• Japan’s Nikkei was cited both as evidence of multi‑decade stagnation and as an example where total‑return (including dividends) and dollar‑cost averaging look much better than price‑only, lump‑sum-at-peak.
• General consensus: diversification across countries and assets is crucial; no guarantee the US outperformance continues.

Inflation, CPI, gold, and purchasing power

• Some argued the chart understates inflation and that the dollar’s purchasing power collapse is the “real” story.
• Gold was suggested as an alternative inflation proxy (~100x over the century), but others countered that gold is highly volatile, policy‑distorted, and not a good long‑run inflation measure.
• CPI “manipulation” claims were met with references to its heavy external scrutiny and independent projects that broadly validate it, while acknowledging methodology debates (e.g., housing).
• Several noted that modest, predictable inflation is by design: holding cash long‑term shouldn’t be a winning strategy; you’re supposed to invest.

Behavioral aspects and drawdowns

• Some framed the chart not as returns but as a test of “nerves of steel”: most investors struggle to hold through deep drawdowns.
• A few commenters claimed they were never tempted to sell in major crashes and even see crashes as buying opportunities; others argued timing such moves is extremely hard and that complacency about crashes is dangerous.

Future equity returns and structural tailwinds

• One thread questioned whether past US equity growth is repeatable over the next 50 years, noting historic tailwinds:
  • Falling corporate tax rates
  • Falling interest rates and rising P/E multiples
  • Demographic expansion
  • Improved diversification lowering required risk premia
• Environmental and other future headwinds may not be fully priced. The view here: stocks will likely still beat bonds over the long run, but expecting past US‑style returns may be optimistic.

Other investment issues raised

• Concern that many 401(k)s default to cash or money‑market options, leading to dramatically lower long‑term outcomes for uninformed savers.
• Repeated emphasis that dividends and their reinvestment are crucial; price‑only equity charts are misleading.
• Historical notes: broad‑based index funds for retail investors have existed for decades, but minimums and access used to be harder.
• Rule‑of‑72 math was used to sanity‑check the small‑cap line; side discussion on better approximations and mnemonics.