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Chart of the Day: Stocks vs. Bonds in the Long-Run

Samuel A. Kiburz Jan 17, 2024


Today’s Chart of the Day is from an article called, “Stocks for the Long Run? Sometimes Yes, Sometimes, No.” by Edward McQuarrie from Santa Clara University in November 2023. It shows the stocks, blue, versus bonds, orange, advantage over 10-year holding periods going back to 1802.

A few things to note:

  • Yes, stocks have outperformed significantly more than not, but there have been numerous 10-year timespans that they did not, which supports the thought, "If you think you need cash within the next 10 years, having some level of bonds is advisable, so you do not have to sell stocks at a loss when they are down."
  • Why have stocks outperformed bonds since WWII? Tremendous advances in science and technology. These advances have propelled society forward and those who took the risks to fund these endeavors did so through their investment in the stock market and were rewarded for it.

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