Cyclically adjusting between bonds and stocks – is there any point?
I was wondering whether there is any correlation between long term bond yields, inflation and stock returns at all? Because there seems to be none in long time frames. Stocks seem to rise regardless of high or low inflation.
The stock market has risen to considerable heights since the 1900s despite bond yields and inflation fluctuating between considerable highs and lows between 2 world wars, a great depression, oil price shocks, stagflation and the great recession.
There is even this chart which shows the long term trend of stock prices over the past 500 years. The only trend is only up it seems.
So why invest in bonds at all if stocks such have a long term positive bias?
It seems to me if one just invests in the stocks of any one of the global superpowers in any century or era they are living in, they’ll just do fine in the long term.
Marked as spam