[zippy5]

I do think there is some real signal in this article in addition to the survivorship bias.

1) Noting that the stock market was boring I think is real indicator of the mass psychology of that time. There is definitely a inverse correlation between enthusiasm for markets and future returns.

2) Noting the returns of standard Oil is a reasonable take. There was a massive expansion of combustion engine production in the preceding two decades and inferring that this would be correlated with increased demand for oil based products is not hot take. Also it doesn’t take a genius to understand a oil is better business that automobiles, recurring revenue and all.

3) Tax rates have historically influenced valuations.

4) I’m not sure how to extrapolate the the German currency situation but I think looking at the relative attractiveness global markets makes sense.

[xorfish]

How well a sector as a whole does is practically irrelevant for what return on investment a investor gets by investing in said sector.

A sector can shrink from 63% of the total market to less than 1% and outperform the market over the time that happened. See the US railway sector from 1900 to 2020:

https://www.credit-suisse.com/media/assets/corporate/docs/ab...

[zippy5]

I think the example of the railroad is biased by the exact same phenomenon. From 1900, In the next 10 years you would see the mass production of automobiles and the invention of the airplane. Basically it’s the story of disruption told from the perspective of the disrupted technology.

In the 1920’s standard oil subsidiaries were still an effective monopoly for petroleum in the us market. Therefore a reasonable proxy for the future profitability of the entire industry in that market assuming that their ruthless anticompetitive behavior allowed them retain their market dominance. Additionally they were profiting off the same disruption in transportation that you are citing, which as we are both acknowledging was massive.

The book Titan is awesome context for this. Wonderful read.

Unlike the technology such as railroads, natural resource commodities and vertically integrated supply chains tend to not be disrupted as easily (very unfortunate for us).

I’m not saying that it couldn’t have gone wrong, but clearly an asymmetrical risk reward at 3-5 PE. So in general you are right, but I think if you find a company that has a great business model, is a monopoly, and is disrupting a massive market, at reasonable price, you have a recipe for outlier returns.