The chart shows the returns of 30-year US treasury bonds snatching the lead from the stock market index of developed countries.From Bloomberg (bold highlight mine), ``Buying 30-year Treasuries is returning more than stocks for the first time since Jimmy Carter was president.
``For three decades, owning equities in developed countries earned more than “on-the-run” 30-year government bonds. The advantage reversed after $36 trillion was erased from equity markets since October 2007 amid the first simultaneous recessions in the U.S., Europe and Japan since World War II"
Could this be the trend of the future? If so we are reminded of Peter Bernstein's latest admonition at the Financial Times ,
``If the long-run expected return on bonds in the future were higher than the expected return on equities, the capitalist system would grind to a halt, because the reward system would be completely out of whack with the risks involved. After all, from the end of 1949 to the end of 2000, the S&P 500 provided a total annual return of 13.1 per cent, while long Treasuries could grind out only 5.8 per cent a year." (bold highlight mine)
By Mr. Bernstein's insight, could this imply that global governments will be embracing socialism or totalitarianism as well? If it does, my guess is that these may lead to more national bankruptcies or a collapse in the monetary system.
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