In the U.S. market, stocks only outperformed bonds by less than 1% per year on average during the 19th century.
Between 1802 to 1872, stocks and bonds were on par with each other. The first 55 years of this period saw bonds outperforming stocks.
Source: The Fundamental Index by Robert Arnott, Jason Hsu, & John West.
While not explicitly mentioned, I believe the stock returns include dividends as the preceding paragraphs in the book discuss the varying levels of yield of the markets during different time periods which have changed dramatically over time. For example, the book also mentions that stocks yielded an average of 8% at the beginning of the 1950’s, while this number dropped to 1.9% in 2008.
Of course the 19th century was a much different time for a variety of factors, and past performance doesn’t tell you much about future performance, but what struck me most about this information is how it must affect an investor going through that. Certainly there is much more trepidation for investors today compared to the beginning of 2007, but imagine an environment where conventional wisdom (that there is an equity premium) didn’t play out for your entire investing career… Scary.