What is the sizzle and hype all about when it comes to the media making investment recommendations? Their sexy story of owning the next big stock, like an Apple or a Google, is what dreams are made of in America. But for a reality check, consider this: Over the past 30 years, bonds have outperformed stocks, according to Ibbotson Associates, a research firm.
This is in spite of bonds consistently having the media allure of a wet blanket and generally being owned by ultraconservative investors. But these aren't just your Dad's bonds anymore. They whipped the performance of stocks (just barely, of large US companies) returning 11.03% versus 10.98%. And the bond index bested stocks for the past 10 and 20 years, too. In the shorter term, the difference was more dramatic. Last year, the SBBI bond index returned 28%, while the S&P was basically unchanged. The municipal bond market, meantime, had its best year since 2009, outperforming not only stocks, but Treasuries, corporate debt and commodities as well.
Hard to imagine the Buick of investments (bonds) having the performance edge over the sports car of investments (stocks) – and for more than 30 years, no less. One rarely, if ever, hears media financial gurus like Dave Ramsey, Suze Orman or Jim Cramer spouting about bonds. In fact, Cramer would not have an audience if he focused upon such drama-free investments. Even less airtime is given to the municipal (aka tax-free) bond market. Armageddon is way overdue in that bond market according to the "experts."
