returns for the most successful railroad companies were mere 5% - competition kept things down (although speculation in early years lead to phenomenal returns - if sold)
However, a moderate VC return is 3fold over ten years - which is ~12.5% YoY (unless my maths is bad). But then that is 12.5% of millions and millions not just one company.
That the return (assuming no sale at top of a bubble) for the best companies in the biggest industry of 19C was only 5%-10%. (Based on equity, it seems Harford did not calculate dividend return which may make a difference)
Making 15-20% without an exit is a great deal - supporting I think your point.
Indeed, I agree. I'd be curious to know how common was the use of debt during that period. 5%-10% is a good return on an unlevered asset, debt could provide an additional turn - then, I don't know how the Kd and CPI was during that period.
During the 19th Century, U.S. railroads relied primarily on debt issues to finance their growth. This policy contributed to major financial crises (www.biu.ac.il/soc/ec/wp/16-01/16-01.pdf)
http://books.google.co.uk/books?id=6BLqprHdwygC&lpg=PA15...
returns for the most successful railroad companies were mere 5% - competition kept things down (although speculation in early years lead to phenomenal returns - if sold)
However, a moderate VC return is 3fold over ten years - which is ~12.5% YoY (unless my maths is bad). But then that is 12.5% of millions and millions not just one company.