In contrary to what the chartists say, equities are not always a better investment bet than bonds. Read John Authers’ article where he provides a summary of what has happened in the last 10 years.
US bonds have posted annual gains of 8.4%, compared with the stock market’s 7.65%, always supposing that no asset management errors were committed in the short-term: it’s possible that the stock market is a profitable investment, but it’s not a certainty due to its volatility. So in summary: it wasn’t worth it, so much chartism, and so many management costs – which swallowed up a good part. A simple, boring bond would have made you much richer, significantly richer. Of course you needed to know what was going to happen. The ingenious Austrians, those who include a good dose of reality in their thinking, bet that expansive monetary policy was going to fuel hyperinflation. And as a result, interest rates on bonds were going to go through the roof: whoever held bonds was going to lose their shirt (the price of bonds falls when rates go up). A big mistake.
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