Episode 324 - Dr. Bryan Taylor: Lessons from Market History (1600-2024)

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Sep 26, 2024

Dr. Bryan Taylor, President and Chief Economist at Global Financial Data, shares his expertise on historical financial trends spanning the last 400 years. He highlights how geopolitical events, like the French Revolution, shaped market behavior and investment strategies. The discussion uncovers the 'four horsemen' impacting returns—war, inflation, socialism, and autarky. Dr. Taylor also delves into the performance of stocks versus bonds, the significance of historical data for modern investments, and the evolution of emerging markets throughout history.

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ANECDOTE

Global Financial Data's Origins

Dr. Taylor started Global Financial Data in the 1990s, initially collecting data by hand from libraries around the world.
This involved physically visiting libraries, copying information from books, and manually entering it into a database.

INSIGHT

Copyright Challenges

Data from the 1930s, 40s, and 50s is harder to collect than older data due to copyright restrictions.
Copyright laws prevent online access, necessitating physical library visits for this period while pre-1920s data is often freely available online.

INSIGHT

Value of Historical Data

Historical data is valuable for understanding market behavior across multiple cycles.
Dr. Taylor emphasizes that human emotions like greed and fear drive markets and these don't change over time.

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Have you ever wondered how financial markets performed centuries ago or how world events impacted stock prices? Today, we sit down with Dr. Bryan Taylor, President and Chief Economist at Global Financial Data, to unpack the world’s fascinating financial history. Dr. Taylor is known for his extensive work in collecting and analyzing historical financial data that spans several centuries and his valuable knowledge of stock, bond, and commodity market trends, which led to the creation of Global Financial Data. In our conversation, Dr. Taylor shares insights from his extensive research, covering stock and bond returns from as far back as the 1600s. From the impact of the French Revolution on financial markets to the performance of commodities, Dr. Taylor provides a rare view of the long-term trends shaping today’s financial decisions. Learn about the value of historical financial data, its importance for investment decision-making, and how long-term trends can provide insights into future market behaviour. We discuss the creation of Global Financial Data's extensive historical financial database, the challenges of gathering centuries-old data, and the long-term performance of stocks versus bonds. Explore the impact of major geopolitical events on financial markets, the importance of studying historical market trends for modern investment decisions, and how his data-driven research has been utilized. Join us as we delve into the world’s financial history and its relevance to today’s investment landscape with Dr. Bryan Taylor. Tune in now!

Key Points From This Episode:

(0:03:41) Background about Global Financial Data, their data sources, and the challenges of collecting historical data.

(0:09:27) What he finds fascinating about historical data, who uses the database, and the role of historical data in financial decision-making.

(0:14:49) How stocks have performed relative to bonds throughout the financial records.

(0:17:34) Uncover the main historical factors that limit returns and increase risk for investors and the five financial eras.

(0:23:18) Explore the trends in stocks and bonds during the five financial eras and the impact of government debt and inflation on returns.

(0:29:04) Common characteristics of countries that have had bad long-term market outcomes and the effect of world events on markets.

(0:35:11) Learn about the best and worst-performing markets and what makes the US market so resilient.

(0:38:36) His outlook for stocks and bonds and how the recent bear market compared to past market upheavals.

(0:41:36) Compare past and current interest rates and the return on commodities versus stocks and bonds.

(0:46:20) Overcoming the lack of historical data for emerging market returns and what defines an emerging market.

(0:52:29) Find out how emerging markets have performed throughout history and how often they make the transition to developed.

(0:59:04) Unpack the historical market concentration in the US and his thoughts on the expected returns of the US stock market.

(1:03:42) Final takeaways and Dr. Bryan Taylor shares his definition of success.

Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Dr. Bryan Taylor — https://www.linkedin.com/in/bryan-taylor-46a92032/

Global Financial Data — https://globalfinancialdata.com/

Dr. Bryan Taylor on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=4320002

Papers From Today’s Episode:

‘France and the Four Horsemen of the Market’ — https://globalfinancialdata.com/france-and-the-four-horsemen-of-the-market

‘The Financial History of Emerging Markets: New Indices’ — https://dx.doi.org/10.2139/ssrn.4193062