By Ben Carlson
A Wealth of Common Sense
This is a new phenomenon in recent decades for long duration bonds. Before interest rates finally started to rise of late, long-term bonds were in the midst of one of the greatest bull markets of all-time.
Long bonds have gotten crushed in recent years, but they were on a ridiculous run prior to the current cycle of high inflation and rising rates. In the 25 years ended in March of 2020, long-term bonds had better annual returns than the S&P 500® Index—8.2% to 8.0%—and they did so with one-third less volatility. Long bonds also outperformed U.S. stocks in the nearly 30 year period starting in 1981 and ending in February of 2009—10.6% to 9.2%.
Most of the time stocks beat bonds over the long run, but not always.
The commentary is the opinion of the author and distributed with permission under limited license. All data and charts presented herein are from sources deemed to be reliable but are not guaranteed to be accurate. The financial information presented is for information and educational purposes and is not a substitute for professional advice; use of or reliance on any information herein is solely at your own risk. Edited from the original.