Siegel: all US stocks
Stocks for the Long Run: 100 percent US stocks (Jeremy Siegel)
Where it stands today
Our calculation, 1926-07 – 2026-09
Growth of $10,000
Where it came from
Jeremy Siegel, a finance professor at the Wharton School, set out to answer a simple question with the longest data he could find: what have US stocks, bonds, bills and gold really returned after inflation since the founding of the modern financial system? His research article 'The Equity Premium: Stock and Bond Returns since 1802' appeared in the Financial Analysts Journal (the year is not verified here; I believe 1992). He pushed US stock and bond data back to 1802 by combining older sources, and found that, measured in real terms, stock returns had been surprisingly stable at about 6.5 to 7 percent a year across very different eras.
The book 'Stocks for the Long Run' came out on 15 January 1994 (first edition, Irwin Professional Publishing), at the start of the 1990s bull market. Further editions: 2nd on 1 March 1998 (McGraw-Hill), 3rd on 21 June 2002, 4th on 27 November 2007, 5th on 7 January 2014 and 6th in autumn 2022 (the Wikipedia page gives September 27 and October 4, 2022). The 6th edition grew from 19 to 28 chapters and about 424 pages and added material on monetary history, global investing, factor investing, ESG and behavioural finance (Prudent Management summary).
Core thesis. Over holding periods of about 20 years or more, US stocks had higher after-inflation returns than bonds, bills, gold or the dollar, and the volatility of the average annual return falls faster with the length of the holding period for stocks than for bonds, so that in Siegel's measure stocks were less risky than bonds over long horizons. The data cited in the 2002 edition (Wikipedia summary): worst one-year real return 1802-2001 was -38.6 percent for stocks and -21.9 percent for bonds, but the worst ten-year result was -4.1 percent for stocks against -5.4 percent for bonds, and stocks did not lose money over any twenty-year period. Siegel recommended a very high stock share for long-term investors and was sceptical of long-term bonds.
Real returns by period. In the sixth-edition data, 1802-2021: stocks about 6.9 percent a year, long-term government bonds 3.6, Treasury bills 2.5, gold 0.6 and the US dollar -1.4 percent; one dollar in stocks would have become about 2.3 million dollars after inflation and in long bonds about 2,000 dollars. Stocks by sub-period: 6.7 percent for 1802-1870, 6.6 percent for 1871-1925 and 7.1 percent for 1926-2021 (about 6.76 percent including the first half of 2022). The 5th edition data, 1802-2012: stocks 6.6, long bonds 3.6, bills 2.7 and gold 0.7 percent. Earlier editions used slightly different sub-period figures (for example 7.0 percent for 1802-1870 and 6.6 percent for 1871-1925 in the 2005 article; 6.8 percent for 1871-2001 in the 2002 edition).
Shifts in the periods, with real returns from the 2002 edition (Wikipedia): 1946-1965 stocks +10.0 percent, bonds -1.2; 1966-1981 stocks -0.4, bonds -4.2, gold +8.8; 1982-2001 stocks +10.5, bonds +8.5, gold -4.8 percent. In 2001 Siegel's own forward estimate was 4.5 to 5.5 percent real return for stocks, an equity risk premium of about 2 percent and a justified P/E of 20-25, i.e. lower than the historical average.
Later extensions. In 'The Future for Investors' (2005) he argued that dividend-paying and value stocks had beaten the market and that investors fall into a 'growth trap'; he suggested putting up to 40 percent of the stock portfolio abroad, weighted by market size (55 percent US/Canada, 28 Europe, 9 Japan, 3 other developed Asia, 5 emerging, Wharton, 23 Mar 2005) and about half of a portfolio into return-enhancing high-dividend groups and REITs. In 2022 he reported that the long-run real return was still 6.7 percent after updating the data to June 2022, and that the equity premium was 'remarkably durable' while real TIPS yields had fallen (Knowledge at Wharton, 2022).
What is in it
| US stocks (broad market) | 100% | The book's core recommendation is a stock-heavy portfolio for long horizons; Siegel does not publish one fixed allocation in the sources read |
How we model it
| US large companies (S&P 500) | 100% |
For a euro investor
How to build it with European funds
| Part | Share | Example funds (ISIN) |
|---|---|---|
| US large companies (S&P 500) | 100% | iShares Core S&P 500 UCITS ETF USD (Acc) IE00B5BMR087Vanguard S&P 500 UCITS ETF (USD) Distributing IE00B3XXRP09 |
The idea
The long-term expected real return of stocks is high and rather stable, the return is only weakly affected by inflation in the long run and the risk of losing money falls quickly with the holding period, while bonds lose purchasing power; therefore someone who can hold for decades should hold stocks.
How people buy it
A low-cost broad US stock index fund (S&P 500 or total market, for example VOO, VTI, VFIAX). Siegel's later books and WisdomTree work also use dividend-weighted index funds (he was named senior investment strategy advisor of WisdomTree, as stated by ETF.com in 2015; status in 2026 not checked) and global index funds for the foreign part.
Rebalancing as published
Not applicable for a single-asset portfolio; Siegel's message is to hold stocks through crashes (a general reading, not a verified quotation). In the 2005 book he advises a global weighting by market value for the foreign sleeve.
Variants
- Siegel's 'Future for Investors' variant (2005): up to 40 percent of the stock portfolio abroad, weights 55 US and Canada, 28 Europe, 9 Japan, 3 other developed Asia, 5 emerging markets of the world's stock value, plus a tilt to high-dividend stocks and REITs for about half of the portfolio.
- Siegel's 2002 view that expected real return would be about 4.5-5.5 percent (i.e. lower than 6.5-7) and, in the 6th edition, the idea of global and emerging-market diversification.
- Compare with 60/40 or 90/10 portfolios (m_buffett, m_vg_growth) that keep a bond share.
Criticism
- Survivorship and US exceptionalism. Jorion and Goetzmann (Journal of Finance, 1999) studied 39 stock markets from the 1920s: US price return 1921-1996 was 4.3 percent real, the highest, versus a median of 0.8 percent elsewhere (the 1997 working paper gave 4.73 and 1.5); they argue the US is the winner of the century, so US results are an upward-biased guide.
- Valuation. Robert Shiller (Irrational Exuberance, 2000) argued that even 20 to 30 year holding periods are not safe when started at a high CAPE and that the 20th century was unusually good for US equities (Wikipedia).
- Data. Edward McQuarrie (Financial Analysts Journal 2023, with earlier papers) extended US stock and bond data back to 1792: from 1792 to about 1941 stocks and bonds earned roughly the same, he reports mean real returns in the 19th century of 6.68 percent for stocks and 6.98 for bonds, against 8.85 and 2.32 percent in the 20th century. The share of 30-year windows in which stocks beat bonds falls from about 90 percent in Siegel's data to about 67 percent. He also states that Siegel's 19th-century bond returns are too low by about 1.5 percentage points.
- Horizon. Few investors really hold for 20-30 years without needing the money; results depend strongly on start and end dates, and bonds, gold, real estate and foreign stocks have beaten US stocks in some long periods, especially after high valuations (Wikipedia).
- Siegel's reply in McQuarrie's account: he never said stocks are risk-free, and rightly points out that a mix with bonds has lower volatility; McQuarrie notes that a 60/40 mix reached similar returns with shallower drawdowns in the 1946-1981 period.
- Falling equity premium. Siegel himself lowered his expected return in 2001 and noted that factor premia (value, size) were very weak in the US since about 2006.
Through the eras
| Era | Dates | Total | Per year | Worst drop | S&P 500 |
|---|---|---|---|---|---|
| Roaring Twenties boom | 1926-07 – 1929-08 | +153.7 % | +34.2 % | −5.9 % | +153.7 % |
| Wall Street crash and Great Contraction | 1929-09 – 1932-07 | −78.2 % | −40.6 % | −83.7 % | −78.2 % |
| New Deal recovery | 1932-08 – 1937-02 | +268.7 % | +32.9 % | −28.9 % | +268.7 % |
| Recession within the Depression | 1937-03 – 1938-03 | −49.5 % | −46.7 % | −49.5 % | −49.5 % |
| Rearmament and World War II | 1938-04 – 1945-09 | +205.8 % | +16.1 % | −28.1 % | +205.8 % |
| Postwar expansion | 1945-10 – 1965-12 | +1212.9 % | +13.6 % | −24.3 % | +1212.9 % |
| Golden age of the 1950s | 1950-01 – 1959-12 | +438.8 % | +18.3 % | −14.9 % | +438.8 % |
| Go-go years and nifty-fifty | 1966-01 – 1968-12 | +34.0 % | +10.2 % | −15.5 % | +34.0 % |
| The Great Inflation (stagflation) | 1969-01 – 1982-07 | +84.6 % | +4.6 % | −46.5 % | +84.6 % |
| 1973-74 oil shock and bear market | 1973-01 – 1974-12 | −41.7 % | −23.7 % | −46.5 % | −41.7 % |
| Second oil shock and the Volcker disinflation | 1979-01 – 1982-08 | +59.2 % | +13.5 % | −16.3 % | +59.2 % |
| Great bull market in stocks and bonds | 1982-08 – 1999-12 | +2060.4 % | +19.3 % | −29.9 % | +2060.4 % |
| Black Monday | 1987-08 – 1987-12 | −21.8 % | — | −29.9 % | −21.8 % |
| Savings-and-loan crisis and 1990 recession | 1990-07 – 1991-03 | +7.4 % | — | −16.5 % | +7.4 % |
| 1994 bond market massacre | 1994-02 – 1994-12 | −3.2 % | — | −7.6 % | −3.2 % |
| Asian and Russian financial crises | 1997-07 – 1998-10 | +22.4 % | +16.4 % | −17.3 % | +22.4 % |
| Dot-com bubble and crash | 2000-03 – 2002-10 | −37.2 % | −16.0 % | −45.0 % | −37.2 % |
| Recovery and housing boom | 2002-11 – 2007-09 | +97.0 % | +14.8 % | −9.6 % | +97.0 % |
| Global financial crisis | 2007-10 – 2009-03 | −44.7 % | −32.6 % | −50.3 % | −44.7 % |
| The decade after the crisis | 2009-04 – 2019-12 | +411.2 % | +16.4 % | −17.7 % | +411.2 % |
| Fourth-quarter 2018 sell-off | 2018-09 – 2018-12 | −14.4 % | — | −14.5 % | −14.4 % |
| Covid crash and stimulus boom | 2020-02 – 2021-12 | +53.6 % | +25.1 % | −20.2 % | +53.6 % |
| Inflation shock and rate hikes | 2022-01 – 2022-12 | −19.9 % | −19.9 % | −24.8 % | −19.9 % |
Calendar years
Any N-year period
| Any N-year period | Worst | 10 % worse than | Median | 10 % better than | Best |
|---|---|---|---|---|---|
| 1 y (1192) | −65.7 % | −12.9 % | +13.9 % | +35.4 % | +156.4 % |
| 3 y (1168) | −42.9 % | −4.5 % | +11.8 % | +23.1 % | +44.2 % |
| 5 y (1144) | −19.4 % | −0.5 % | +11.6 % | +19.3 % | +35.0 % |
| 10 y (1084) | −5.4 % | +3.5 % | +11.2 % | +16.6 % | +20.5 % |
| 15 y (1024) | −0.4 % | +5.6 % | +10.8 % | +15.9 % | +18.9 % |
| 20 y (964) | +1.8 % | +7.0 % | +10.8 % | +14.7 % | +18.1 % |
| 30 y (844) | +7.5 % | +9.7 % | +10.8 % | +12.9 % | +14.5 % |
How it behaved in history
- 1802-1870 (early republic, Civil War). Siegel's data show stock real returns of about 6.7-7.0 percent a year in this era; McQuarrie finds bonds did as well or better in the 19th century. www.prudentmanagement.com
- 1871-1925 (gold standard, industrialisation, WWI). Real stock return about 6.6 percent a year in Siegel's table. www.prudentmanagement.com
- 1929-1932 Great Depression. Not quantified in the sources read; the worst one-year real loss in the 1802-2001 data was -38.6 percent for stocks. en.wikipedia.org
- 1946-1965 postwar boom. Real return of stocks +10.0 percent a year and bonds -1.2 percent a year (2002 edition). en.wikipedia.org
- 1966-1981 inflation era. Stocks lost 0.4 percent a year in real terms, bonds -4.2, gold +8.8; this is the period in which a pure stock portfolio did not beat inflation. en.wikipedia.org
- 1982-2001 disinflation and bull market. Stocks +10.5 percent real, long bonds +8.5. en.wikipedia.org
- 2000-2002 dot-com bust. After the bust, the third edition (2002) lowered Siegel's own forecast to about 4.5-5.5 percent real for stocks with a 2 percent premium. en.wikipedia.org
- 2022 inflation and rate shock. Siegel updated data to mid-2022 and kept the 6.7 percent long-run estimate; the first half of 2022 bear market reduced the 1926-2021 figure from 7.1 to about 6.76 percent. www.prudentmanagement.com
Published results (by others)
- US stocks real total return 1802-2021 (1802-2021): 6.9% a year (long bonds 3.6%, bills 2.5%, gold 0.6%, dollar -1.4%) www.prudentmanagement.com
- Sub-period real stock returns, 6th edition data (1802-1870 / 1871-1925 / 1926-2021): 6.7% / 6.6% / 7.1% a year www.prudentmanagement.com
- Real returns 1802-2012 (5th edition summary) (1802-2012): stocks 6.6%, long bonds 3.6%, bills 2.7%, gold 0.7% a year www.getabstract.com
- Updated long-run real return of stocks (1802 to mid-2022): 6.7% a year, equal to the last 30 years knowledge.wharton.upenn.edu
- Real returns by sub-periods in the 2002 edition (1946-1965 / 1966-1981 / 1982-2001): stocks +10.0 / -0.4 / +10.5; bonds -1.2 / -4.2 / +8.5; gold -2.7 / +8.8 / -4.8 percent a year en.wikipedia.org
- Worst real returns in the data (1802-2001): worst 1-year: stocks -38.6%, bonds -21.9%; worst 10-year: stocks -4.1%, bonds -5.4% en.wikipedia.org
- Mean real returns of stocks and bonds, McQuarrie's extended data (19th century / 20th century): stocks 6.68% / 8.85%; bonds 6.98% / 2.32% rpc.cfainstitute.org
- US versus other markets, price return after inflation (Jorion and Goetzmann) (1921-1996): US 4.3% a year; median of other 38 markets 0.8% ideas.repec.org
What we could not verify
- Exact sub-period numbers vary by edition (7.0 vs 6.7 vs 5.8 percent for 1802-1870 in different sources); the figures above are as reported by secondary summaries, not read from the book.
- The year of the Financial Analysts Journal article (1992 is my belief; the PDF was not readable) is unverified.
- No sentence with a fixed percentage 100 percent stocks from Siegel was verified; the model is our reading of his thesis.
- Siegel's current role at WisdomTree not checked for 2026.
- Sources for a criticism attributed to a 'Jenni' were not found; Shiller, McQuarrie and Jorion-Goetzmann are used instead.
- The Wikipedia page gives different 6th-edition dates (27 September vs 4 October 2022).
Sources
- en.wikipedia.org
https://en.wikipedia.org/wiki/Stocks_for_the_Long_Run - www.prudentmanagement.com
https://www.prudentmanagement.com/monthly-commentaries/jeremy-siegels-magnum-opus/ - knowledge.wharton.upenn.edu
https://knowledge.wharton.upenn.edu/article/jeremy-siegel-why-stocks-are-still-durable-in-the-long-run/ - knowledge.wharton.upenn.edu
https://knowledge.wharton.upenn.edu/podcast/knowledge-at-wharton-podcast/jeremy-siegels-latest-book-lays-out-the-future-for-investors/ - rpc.cfainstitute.org
https://rpc.cfainstitute.org/index%2Ephp/blogs/enterprising-investor/2024/stocks-for-the-long-run-setting-the-record-straight - efinance.org.cn
http://efinance.org.cn/cn/fm/The%20Equity%20Premium%20Stock%20and%20Bond%20Returns%20since%201802.pdf - www.nber.org
https://www.nber.org/papers/w5901 - ideas.repec.org
https://ideas.repec.org/a/bla/jfinan/v54y1999i3p953-980.html - www.getabstract.com
https://www.getabstract.com/en/summary/stocks-for-the-long-run/20912 - www.etf.com
https://www.etf.com/sections/news/siegel-new-normal-investing-opportunities - rpc.cfainstitute.org
https://rpc.cfainstitute.org/en/research/financial-analysts-journal/2023/stocks-for-the-long-run - en.wikipedia.org
https://en.wikipedia.org/wiki/Jeremy_Siegel
Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.