So I have seen a question recently about safe investments (govt bonds etc), and someone said index funds were safer over a 30 year period, because you would be losing to inflation with the current low interest govt bonds. I am not here to debate that the merits of that answer. What I do want to know is lets say you made a really unsafe, in hindsight, investment in an index fund investment, how long would it take to recover. I am picking a 1920 equivalent of an index fund (yes I know they weren't invented then, but lets say someone made their own equivalent small one), of German stocks. Which would have been hit it with the Great Depression and the losing end of WW2.

So to see how unsafe stocks could be:

How long would it take an imaginary 1920 German index fund to recover, after WW2?

  • 2
    The performance of the Japanese stock market in the 1940s will be similarly instructive. A book that may interest you: Triumph of the Optimists: 101 Years of Global Investment Returns by Elroy Dimson, Paul Marsh, Mike Staunton.
    – Flux
    Commented Sep 15, 2020 at 9:58
  • 1
    I think this would depend on whether or not your hypothetical index fund completely folded during the 1930-40 devaluation - you can recover from most things, but you can't recover from zero.
    – Zibbobz
    Commented Sep 15, 2020 at 17:44

1 Answer 1


This is not easy to tell, but I'll give it a try.

The German Wikipedia article about the DAX contains a reference to a historical extrapolation of the CDAX:


(On https://de.wikipedia.org/wiki/Wirtschaft_Deutschlands, more index values can be found from this era.)

Assume your hypothetical index fund wouldn't have any fees nor tracking error, so the fund develops exactly as the index itself.

We see the price take a big hit down to about 1.5 soon after. Then it recovers a bit to over 8, take another hit down below 4 during the Great Depression and then recovering again until the end of WW II to about 12.

Then another big hit comes and takes us down to about 3. Only the "Wirtschaftswunder" (economic miracle) takes us up again, crossing the line of 6 (where we started from) even before 1950. From then on, this line is never crossed again.

Considering only these 30 years, we are more or less as wealthy as before, but we have survived the Great Inflation of 1923, the Great Depression and WW II. During these 30 years, where were two monetary reforms have taken place, taking away most savings from the German citizens. So we have managed to at least keep our wealth.

If we are able to keep our investmens for a while, after the "Golden 1950s" our investments are about ten times higher, about 64.

In comparison to keeping cash, we managed to keep the investment instead of losing it in the Great Inflation, where in the end 1 trillion ℳ was exchanged to 1 ℛℳ. 1948, the second monetary reform roughly exchanged 10 ℛℳ to 1 DM.

It's hard though to make a direct relation between an investment in ℳ of 1920 and the proceeds in DM in 1950; one would need to know the exact share prices from that time.

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    In summary, if you purchased at the exact wrong time in 1917, you would have had to wait 40 years before you made your money back (not including inflation). With inflation, it would have taken ~45 years.
    – dberm22
    Commented Sep 15, 2020 at 18:34
  • @dberm22 I am not sure about inflation, though. If you compare with and without inflation, you have to take into consideration that there was a huge inflation 1923 of the ℳ at that time and that the time spans three different currencies (ℳ, ℛℳ and DM).
    – glglgl
    Commented Sep 17, 2020 at 7:55
  • That's fair. I assumed a 2-3% inflation. I had not looked at actual inflation. It would also be interesting to look at this if you dollar cost averaged. Even though it was "flat" for 40 years, you probably would have still made money along the way if you DCA'ed
    – dberm22
    Commented Sep 17, 2020 at 17:15
  • @dberm22 MCA'ed (Mark cost averaged) ;-) I am not sure about that in general, but I'd assume if I had 10000 ℳ as of 1920 and I distributed that over the next 5 years, after 2 or 3 years the not invested rest of my money would have gone, so no good idea either. (See en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic for more, e. g. "A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923" and "By November 1923, the US dollar was worth 4,210,500,000,000 German marks".)
    – glglgl
    Commented Sep 18, 2020 at 8:25

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