In This 10-Year Race, Bonds Win by a Mile
WHEN the Dow Jones industrial average climbed back to 10,000 this month, the achievement was widely noted but barely celebrated, and for good reason.
“Haven’t we done this several times before?” asked Edward Yardeni, the economist and investment strategist.
In fact, we had. The Dow had crossed 10,000 on more than 20 occasions, starting in late March 1999, when the market was so hot that stock-picking seemed to have become the national pastime. In that year, the book “Dow 36,000” confidently declared that stocks were “actually less risky than bonds” and that the Dow would more than triple in value within a few short years.
As investors know all too well, the financial history of the last decade turned out a bit differently. Stocks proved to be extremely risky. Despite the recent rally, in the 10 years through September, most stock investors lost money.
What may be less widely understood is that over that same 10 years, while the stock market’s overall returns were disappointing, the bond market produced handsome gains. Bond rallies have not generated the hoopla that the stock market customarily receives, but over the last 10 years, investors have had more reason to celebrate if they held bonds, not stocks, in their portfolios...
Read entire article at NYT
“Haven’t we done this several times before?” asked Edward Yardeni, the economist and investment strategist.
In fact, we had. The Dow had crossed 10,000 on more than 20 occasions, starting in late March 1999, when the market was so hot that stock-picking seemed to have become the national pastime. In that year, the book “Dow 36,000” confidently declared that stocks were “actually less risky than bonds” and that the Dow would more than triple in value within a few short years.
As investors know all too well, the financial history of the last decade turned out a bit differently. Stocks proved to be extremely risky. Despite the recent rally, in the 10 years through September, most stock investors lost money.
What may be less widely understood is that over that same 10 years, while the stock market’s overall returns were disappointing, the bond market produced handsome gains. Bond rallies have not generated the hoopla that the stock market customarily receives, but over the last 10 years, investors have had more reason to celebrate if they held bonds, not stocks, in their portfolios...