Capital Markets Winter 2021
III
Long-Term Appeal of Stocks Lending vs. Owning
• U.S. stocks outperformed intermediate-term U.S. government bonds about two-thirds of the time over one-year periods since 1950, but beat bonds in every 20-year rolling period • The standard deviation of returns for stocks is almost three times larger than for bonds over one-year intervals but nearly equal over 20-year rolling periods
I
II
Proportion of Time That Stocks Outperform Bonds
III
100%
82%
75%
68%
IV
V
1 year
5 Years
10 Years
20 Years
VI
Source: Morningstar and Alger. Stocks are represented by the S&P 500 and bonds are the Ibbotson U.S. Intermediate-Term Government Bond Index. Data is annual rolling returns 1950 through 2020. Standard Deviation measures how much the portfolio’s return has deviated from its average historical return. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.
22
Made with FlippingBook Publishing Software