The performance of the S&P 500 stock index to the bond market. First he focused on his “all-time favorite graph” comparing “the results from investing $100 in a 25-year zero-coupon Treasury bond at its yield high (and price low) in October 1981, and rolling it into another 25-year Treasury annually to maintain that 25-year maturity.”
His bottom line: “On March 31, 2009, that $100 was worth $16,656 with a compound annual return of 20.4%. In contrast, $100 invested in the S&P 500 at its low in July 1982 was worth $1,502” in early 2009, “for a 10.7% annual return including dividend reinvestment. So Treasurys outperformed stocks by 11.1 times.”
But of course, Wall Street’s not going to push this “boring bonds” alternative. Why? Wall Street can’t make big bucks in commissions. So instead, during this same three decades, Wall Street was using sales gimmicks to sell its losers to America’s 95 million vulnerable investors.
Imagine: If you were in your twenties and just out of college back in 1981, and you started adding a hundred more bucks each and every month using Shilling’s zero-coupon strategy, you’d be enjoying early retirement today, instead of crying because your retirement stocks lost so much of your money.
