Long Treasurys Have Outperformed Stocks Over 5, 10 and 25 Year Periods

by Lou Scatigna


Safe U.S. Treasury Bonds Have Outperformed Stocks Over The Last 25 Years.

I was quite surprised when I came across the following information. This illustrates the extent of the decline in stock prices over just the last year.

Peter Bernstein writing in The Financial Times, cites data showing that long term U.S. Government Bonds have outperformed the S&P 500 on a total return basis over five, ten, and 25 year periods. I was stunned when I read this. In a capitalistic society equities should outperform riskless Treasurys or the incentive to put money at risk by investing in businesses is just not there.

Respected market analyst, Don Coxe of Coxe Advisors stated in his book "If Treasurys outperform stocks, then capitalism is dead".

Larry Summers, economic czar to the president said last week that the U.S. stock market, adjusted for inflation was back to where it was when Lyndon Johnson was president. That's a zero rate of return over 35 years.
Is capitalism really dead, and if so what is going to replace it?