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Posted by on Oct 31, 2011 in Business, Economy | 8 comments

Bonds Beat Stocks For First Time in 150 Years

So says a Bloomberg report today.

It is interesting given that the statistics are gathered over 30 years so that would seem to weed out any short term bull or bear markets. Yet bonds remain the poor cousin to the stock market in the minds of many.

Personally I have no money to invest so it’s somewhat academic for me, but it is interesting.

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  • Jim Satterfield

    But do you think this will affect those who push private accounts because stocks always beat other investments? I don’t.

  • You beat me to it Jim. The “privatization of Social Security was always about Wall Street getting a cut of your money.

  • Mark Nuckols

    Well, in the last 15 years interest rates have fallen dramatically, more than by any other period in modern history, while the stock market’s been mostly flat after a huge run-up in the 90s. I’d say over the very very long run, it’s an aberation. And being right once in 150 years is not a good argument against privatisation. I know my financial situation would be much, much better if we’d had privatised accounts. Does that make me evil?

  • Jim Satterfield

    My question is whether or not this is a temporary phenomenon or something new because of what’s happened to our economic “environment”. The massive disconnect between Wall Street and Main Street just seems to keep growing. When will it correct? Will it correct? Is it because the folks on Wall Street just don’t consider the U.S. consumer/citizen all that important any more? We have more than a few people admitting that it just isn’t the role of business to create jobs, in their opinion. With that attitude who knows how things will go? I wouldn’t bet on Wall Street right now if they actually think that becoming a “global company” means that ignoring the effects they have on the U.S. economy is sound strategy for a while yet.

  • Jim Satterfield

    In regard to my previous post think of Netflix and what happened when a very significant chunk of their customer base felt they were being brushed off.

  • sentry

    Well, plenty of “customers” of government have felt mistreated for a long, long time.

    So bonds are beating stocks — so stocks are returning less than stodgy bonds currently. What about our “investments” in our federal entitlements? What kind of return can Baby Boomers expect? After all, there’s no greater risk, at least nominally, had the funds that are being “invested” purchased Treasury bonds, even the longest-term bonds. And because the current programs can’t continue as is, what will be done to our returns with reform?

    Well, with the stocks, some of us knew even during a bubble that not only was it a bubble, that that it’s unreasonable to expect unreasonable returns. (Same with bonds and everything else as with stocks)

    And yes, the critics here of privatization have a point about the dark motives behind those who would like to gouge, much more than to swindle. (The ordinary, “honest” risk of bear markets in stocks, or in anything else, they likely know about, already.)

    As for the note about low interest rates (struggling with zero and near-zero interest rate policy), I’m surprised, incidentally, that few are noting that interest rates are so low now that savers are being punished, notably the infamous savings account passbook holders and the little elderly old people with their certificates of deposit. Yes, savers are being badly punished these days. (Also, is this not news because many have nothing extra on hand to save? I suspect that’s so!)

  • sentry

    Incidentally, does anybody else remember “The Bear Book”? Who knows, maybe recent and current events (including returns on stocks, the darling of everyone during bull markets for stocks) might be fuel for a revised edition. (bear markets, not the gay subculture)

  • Jim Satterfield

    It’s not that they feel mistreated. They just have an ideological objection to any government that would work after the 19th century. What I was referring to was the fact that Netflix in their anxiety to not be left behind the competition because of their vision of the future decided to jump into it before their customers got there. There seems to be a parallel there in my mind to what businesses who have no desire to hire Americans are doing.

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