A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

by Edward O. Thorp

The tables in appendix B show that stocks and commercial real estate have provided the best long-run results for investors. Interest rate investments have been roughly break-even after taxes and inflation, and only modestly positive for nontaxable investors. However, though equities have performed best in the long run, they have had extended periods when they have been in drawdown, meaning that they were below their previous all-time high. Real estate fell sharply in the financial crisis of 2008–09. Assuming that the risks and returns for asset classes in the twenty-first century will be similar to what they were in the twentieth, long-term passive investors are likely to do best in common stocks and income-producing commercial real estate, though the data is sketchier for the latter. Diversifying between the two may reduce risk and increase overall return.