Skip to main content
No. of Recommendations: 11
Let's spend some time dwelling in the past. I just returned the book, "Birth of Plenty," by William Bernstein to the local library. It tells us a great deal about the future by looking at the past.

He actually starts before the birth of Christ and describes the CAGR of mankind. In fact, nothing happened with the CAGR until about 1500. The CAGR was essentially zero for many thousands of years. However, the existence of the four factors that were discussed in the book came together in Holland in the 16th century to create the CAGR of man. William Bernstein does not say it in these words, but he did not have the BMW Method working for him.

In his fine book, Bernstein shows that the CAGR of mankind finally began to grow from 1500 to 1700 at a rate of 0.2% or less. The existence of property rights, scientific rationalism, an open market, and communication / transportation were slow to develop. But, they did develop and we are the beneficiaries of all that went before.

The industrial revolution changed the rate of growth dramatically in the early 1800s. As I pointed out in a recent post, "From 1800 to 1900, the growth rate was just over 2%...of course, there was no DOW 30 to use to measure the growth. But, the growth is well documented."

Thus, we can easily see that we were making great CAGR progress staring over 200 years ago. We went from almost zero growth to over 2% in 100 years! But, the best was yet to come...we had the 20th Century to go!

From 1896 to 2005, if our growth is measured by the Dow 30, it was over 4%. Let's look at Mike's great 109 year chart for the big picture:

http://invest.kleinnet.com/bmw1/special/DJIA.html

However, our CAGR was actually increasing all of the time because we were getting better at this Capitalism thing. In the last half of the twentieth century, the CAGR was almost 8%!

Check out the graph:

http://invest.kleinnet.com/bmw1/stats40/$INDU.html

Please note that the last 40 years has shown a CAGR of over 8% including the pitiful results from 1965 to 1982. Is there any doubt that we were growing faster in the second half of the twentieth century than in the first half?

What about the last twenty years? Let's rely on Mike's fine work once more:

http://invest.kleinnet.com/bmw1/stats20/$INDU.html

That growth rate since 1985 was well over 11%! Now, that is probably a little too high, but wasn't 8% too low? If America could sustain growth for over 50 years at a GAGR of over 8%, why can't we continue at that rate or at an even greater one?

What is important is seeing the truth about our growth over time. America is growing on an exponential curve, and the rate of growth is accelerating over time. I think that the BMW Method has just been used to prove that fact to you beyond any reasonable doubt.

That, my friends is the message of the BMW Method Board. We have developed the capability to show what is actually happening right here in America. If we think about it, the BMW Method shows lots of things to us...the least of which is how to make lots of money. But, that is a minor benefit of our insight.

The future is up to us. We are in a position to help others to see where we are going and to give them encouragement. The future can be wonderful for us all...if we do not make the same mistakes that slowed us down in the past. Let's learn from our mistakes, build on the knowledge we have acquired and move on to a better future.

How can anyone be discouraged when they look at things like this? The BMW Method makes it possible for me to see things much more clearly. I sincerely hope it does the same for others.

If that does not prove that the Future Looks Peachy, I do not what else to say.
Print the post  

Announcements

BMW METHOD EVENTS

The 2009 BMW Method Conference has been cancelled, due to minimum attendance numbers not being met. We hope to continue the annual BMW Method Conference tradition next fall.

Learn about the first four conferences on the BMW Method Website.

The BMW Method FAQ

BMW Method Website
Annual Conference Videos and Other Resources & Services
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.