Waggoner: What we learned from bonds’ victory


Great column from John Waggoner in USA Today. The headline is a reference to the fact that over the last 1yr, 10yr, 20yr and 30ys periods, bonds (long term treasuries, mainly) have had higher total returns (with dividends all reinvested) than large-cap US stocks (mainly the S&P 500).

Some takeaways:

  1. the selection of stocks is not necessarily a great representation
  2. the bond performance is very unlikely to be repeated since it all covers a period during which bond yields were dropping – from almost 14% in 1981 to about 3% today (and bond prices go up when their yields go down, so a lot of that long term performance was due to this)

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