This has been a very good year for the stock markets, with the S&P 500 index returning around 16 percent so far for 2012. The performance has been strong enough that the ten-year returns for that index are now up to 6.5 percent (including reinvested dividends). Even with the precipitous plunge we had in 2008-2009, the long-term averages for equities are looking very good.
Even so, the bond market has been considerably stronger. According to figures compiled by Morningstar, corporate bonds have returned 8.4 percent annually over the past ten years. Even U.S. Treasury bonds, which have had historically low yields lately, have returned more than the S&P 500 over that decade.
Does that mean bonds are now likely to offer higher returns than stocks? Of course not; past performance, as they say, is no guarantee of future results. And without a chasm like we saw in the stock market when the financial sector collapsed, equity returns could very well be higher over the next ten years than they were over the past ten.
No comments:
Post a Comment