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Bonds Beat Stocks: 1981-2011

Posted By Barry Ritholtz On October 31, 2011 @ 11:00 am In Fixed Income/Interest Rates,Investing,Markets | Comments Disabled

Got Bonds?

Since 1981, long-term government bonds have gained an average of 11.5% per year, handily besting equities. The S&P 500 index gained the 10.8% per year over the same period, with much more risk and greater volatility (data from Jim Bianco [1], president of Bianco Research in Chicago).

Here’s Bloomberg:

“The biggest bond gains in almost a decade have pushed returns on Treasuries above stocks over the past 30 years, the first time that’s happened since before the Civil War . . . Stocks had risen more than bonds over every 30-year period from 1861 until now, according to Jeremy Siegel, a finance professor at the University of Pennsylvania’s Wharton School in Philadelphia.

U.S. government debt is up 7.23 percent this year, according to Bank of America Merrill Lynch’s U.S Master Treasury index. Municipal securities have returned 8.17 percent, corporate notes have gained 6.24 percent and mortgage bonds have risen 5.11 percent. The S&P GSCI index of 24 commodities has returned 0.25 percent.”

Overall, sentiment against bonds has been extremely negative, and remains a positive contrary indicator. Bloomberg notes that “Not only have bonds knocked stocks from their perch as the dominant long-term investment, their returns proved everyone from Bill Gross [2] to Meredith Whitney [3] and Nassim Nicholas Taleb [4] to Leon Cooperman [5], wrong.”

So much for Stocks for the long run . . .
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Source:
Say What? In 30-Year Race, Bonds Beat Stocks [6]
Cordell Eddings
Bloomberg, Oct 31, 2011
http://www.bloomberg.com/news/2011-10-31/bonds-beating-u-s-stocks-over-30-years-for-first-time-since-19th-century.html


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2011/10/bonds-beat-stocks-1981-2011/

URLs in this post:

[1] Jim Bianco: http://search.bloomberg.com/search?q=Jim%20Bianco&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja

[2] Bill Gross: http://search.bloomberg.com/search?q=Bill%20Gross&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja

[3] Meredith Whitney: http://search.bloomberg.com/search?q=Meredith%20Whitney&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja

[4] Nassim Nicholas Taleb: http://search.bloomberg.com/search?q=Nassim%20Nicholas%20Taleb&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja

[5] Leon Cooperman: http://search.bloomberg.com/search?q=Leon%20Cooperman&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja

[6] Say What? In 30-Year Race, Bonds Beat Stocks: http://www.bloomberg.com/news/2011-10-31/bonds-beating-u-s-stocks-over-30-years-for-first-time-since-19th-century.html

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