I've posted this important research several times since it came out, but always worthwhile to read and save "The Academic Paper That Explains Warren Buffett's Investment Success"
!925: The investing world discovers retained earnings.
That "discovery" is akin to the investing world's discovery of "dividend growth investing" that may have been driven by Edgar Lawrence Smith's 1924 book, "Common Stocks as Long Term Investments."
Smith's little book introduced the then-radical notion that a portfolio of common stocks outperform bonds over the long term, and were thus LESS risky than bonds. The book came into prominence when John Maynard Keynes reviewed it favorably in 1925. Keynes emphasized the role of "retained earnings" in the success of stocks over bonds.
Why did it take hundreds of years for the broad investing world to figure that out?
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