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I am looking for reference material. I am trying to get some sort of outlining to questions such as:

  1. why did so many US companies become global-dominating after the WW2?
  2. could such domination be possible without such extreme situations?
  3. to which extent theories and stories about things such as "intrinsic factor" are bluff?
  4. what about other cases over centuries?

Please, do not try to answer the 4 above questions because they are too broad. I am looking for high-quality reference that would advance this area with themes such as "war economy". And please do not provide me answer about more X-trinsic stuff unless you can provide historical context. Please, note that this kind of extreme situations are very different to environments we have now, they were much more restricted with high level of protectionism. So to which extent the sucesses are skill or luck -- I do not know. Something to keep in mind though:

"It takes between 20 and 800 years of monitoring performance to statistically prove that a money manager is skillful rather than lucky - which is a lot more than most people have in mind when they say 'long-term' [track record]." Ted Aronson, "Confessions of a Fund Pro", Money, Feb 1999, pp. 73-75.

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  1. Possibly the best answer to why America became globally dominant after WW2 was written by a FRENCHMAN, Jean-Jacque Sergen-Schreiber, Le Defi American (The American Challenge).

  2. Probably the only legendary investor of the proper age to benefit from WW2 was John Templeton, who borrowed $10,000 before the war, and ended up with $40,000 afterward (both worth about ten times more in today's money). His story, and that of others, can be found in John Train's, "The Money Masters."

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  • it is takes ages to get a war-stricken economy to the level of non-war-stricken economy! It is too surreal to say that only Templeton benefited of the situation. Just look at the real equity returns of US and Sweden over the next 70 years and you are amazed, they grew systematically about 1% more every year than the rest of the world, doubling the size of their economies in comparison to the other world. Look here to chart 1-15 for real equity return and the market age by Professors Philippe Jorion and William Goetzmann. – user1770 Jun 24 '11 at 13:30
  • @hhh: Actually, I was responding to your title, "impact...on "legendary" investors' returns." It's true that a lot of unknown "small" investors benefited from WW2. But the one I know who became "legendary" as a direct result (and wasn't before) was Templeton. – Tom Au Jun 24 '11 at 13:33
  • me too, investors such as Buffett got into environment where its home-ground was well established with machines and the rest of the world was crying for equipments and other stuff. Although Buffett invested in some companies much later the war, you cannot underestimate the importance of the past events. The infra was laid down during war years to the best locations in the world to support armed forces. Now, the investors enjoying national benefits (not discriminated like foreigners) did have huge possibilities. KO/Gillette/MO/etc were things required by armies. – user1770 Jun 24 '11 at 13:37
  • they had well-established Land, they had good Labour, they had the Capital and Entrepreneur with relatively open economy. With all of these factors together for some investors, it is not surprising that their returns were sky-high! The situation now is much different, the old war-stricken economies are becoming to the point of saturation when old infra is repaired and economies can concentrate more on growth. So I am very interested to know what do you think which kind of impact such extreme situations had on "legendary investors'" returns? – user1770 Jun 24 '11 at 13:43
  • @hhh: In my book, "A Modern Approach to Graham and Dodd Investing," I discussed the impact of Keynes' "diminishing marginal efficiency of capital," and noted that in the past, such events had led to a major war, which restored returns to "historical" levels. – Tom Au Jun 24 '11 at 13:50

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