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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Bonds beat stocks over 30 years. So what? |
MoneyWatch - Nov. 8, 2011 - By Larry Swedroe
The financial media has been filled with stories of how a rally in the bond market has caused the 30-year returns on Treasuries to be higher than the returns on stocks, which hasn't happened since the Civil War.
For the period October 1981-September 2011, the S&P 500 Index returned an annualized 10.8 percent, compared to the 11.5 percent annualized return on long-term (20-year) Treasury bonds. Should you be surprised? Yes. It certainly shouldn't have been the expected outcome. However, the right perspective is that it should have been a possible outcome. Let's see why this must be the case.
Stocks are riskier investments than Treasury bonds. Thus, they have higher expected returns. However, it must be true that regardless of how long the horizon is, there must be the possibility that stocks will underperform safer investments -- otherwise there would be no risk for investors with that horizon. And the result would be that they would bid up prices until the expected equity premium disappeared (or at least dramatically decreased). In other words, the fact that stocks have provided a risk premium of about 8 percent is because stocks are risky, even over long periods. And while it's true that the longer the period the more likely it's that stocks will outperform bonds because there's a large equity risk premium, there must be the possibility that they'll underperform, no matter how long the horizon.
There are two other points of interest regarding the noise surrounding the 30-year data. First, the media has ignored the fact that there's an even longer period over which stocks underperformed bonds. For the 40-year period 1969-2008, the CRSP Total Stock Market Index returned 8.8 percent a year, on average, compared to the 9.0 percent annualized return on long-term Treasury bonds.
Second, over the 30-year period ending September 2011, while long-term Treasuries returned 11.5 percent a year, riskier long-term corporate bonds (which even include premiums for call risk) returned just 11.1 percent. And it's important to note that over the 40-year period ending 2008, long-term corporate bonds also underperformed long-term Treasuries by 0.6 percent (9.0 percent per year versus 8.4 percent).
For the complete article.
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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