Reversion to the Mean - Capital Markets - CFO.com

Wow. I did not see this one coming. It is from the Economist and reported on CFO.com but is research by Deutsche Bank.

For the past 25 year Treasury Bonds have outperformed equities, even BEFORE this recent market collapse.

Reversion to the Mean - Capital Markets - CFO.com:

"...over the last 25 years. As the graph shows, Treasury bonds have actually outperformed riskier asset classes over the last quarter century. That is despite the long equity bull-market from 1982 to 2000....

Asset classes can go through long periods when they underperform, leaving them cheap and ripe for revaluation. That happened to Treasury bonds, which suffered four consecutive decades of negative real returns from the 1940s through the 1970s....It was one of the great historical buying opportunities.....Since 1900, the average annual return from Treasuries has been 4.6%, or 1.5% after allowing for inflation. In contrast, American equities have delivered 9.3%, or 6% in real terms.

The current poor performance of stock markets reflects, of course, a reversion to the mean after the excesses seen during the dotcom bubble, when the rolling 25-year annual return of US equities reached a remarkable 16%. On a 10-year basis, the return from equities has now slumped to minus 3.5% in real terms."

If my self-evaluation and stuff for the assessment group can wait a bit longer, I might have to check the data on this for myself. I can see a few years, but 25? Wow.