Unit 2 · Level 4 · Market history
Review: history's homework
Every broad-index crash so far has been followed by recovery, from months (2020) to decades (1929). The averages flatter the past: dead companies, funds and markets vanish from them. Bubbles rhyme around real technologies and impossible prices. And the honest base rate is roughly 5% real for world equities: evidence, never a guarantee.
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What you get asked
Match the historical episode to its lesson
Four episodes, four scars, one curriculum. Markets teach the same course every generation; only the tuition varies.
Why is 'the average fund returned X over 20 years' usually an overstatement?
The graveyard doesn't file performance reports. Whenever you see an average, ask who got removed from it.
Templeton: the four most expensive words in investing are 'this time it's ___ '.
New era, old maths. The story can be true and the price still wrong; that combination is what bubbles are made of.
Historically, roughly what did world equities return per year AFTER inflation?
Roughly 5% real, compounded for decades, built most of the world's index-fund fortunes. Not guaranteed, but it's the best base rate history offers.
A market falls 40% and headlines declare investing dead. History's most defensible response?
You now know the pattern, the graveyard, the bubble script and the base rate. That's history's whole homework: stay diversified, stay in. Unit 3: the factor jungle. 🐜
The rest of this unit
A century of crashes, recoveries and expensive lessons. Read before repeating.