Equities beat other asset classes such as bonds and short-term deposits over the long-term.Stocks not only yield higher returns than those asset classes but also yield higher returns on an inflation-adjusted basis. The following graphs for three developed markets over the course of a century proves this point: Real Equity Returns in US (top), UK …

Continue reading ‘Comparison of Real Equity Returns over a Century Between US, UK and Italy’ »

Stocks generally outperform bonds in the very long term ranging over many decades. For example, U.S. stocks yielded a compounded total return of 9.9% from January 1926 thru December 2010. However bonds beat stocks over shorter time periods such as 5 years, 10 years and stock returns have been mediocre relative to bonds over other periods, …

Continue reading ‘Another Take on Stocks vs. Bonds Performance’ »

Many investors consider defensive sector stocks to be boring and under-performing in both the short and long-terms. However contrary to their beliefs the defensive sector actually yields superior returns especially in the long-term, which can be defined as a holding period at least five years. Not only do these stocks offer higher returns they also …

Continue reading ‘Defensive Sector Stocks Offer Superior Returns To Long-Term Investors’ »

Dividends account a significant portion of the total return of stocks especially over long periods. But how much do dividend yields, dividend growth, multiple expansion contribute to total returns? The following chart from SocGen provides the answer: Click to enlarge   Via The Absolute Return Letter, Oct  2012, Absolute Return Partners LLP The U.S. has …

Continue reading ‘Role of Dividends in Real Equity Returns of Major Global Markets’ »

I came across an interesting article by Jonathan Brodie of South Africa-based Allan Gray Proprietary Limited discussing stock market bubbles and how extreme bearish mainstream media cover stories about investing in stocks are contrary indicators. The famous 1979 BusinessWeek cover that pronounced the ‘Death of Equities‘ was a classic example of such contrary indicators. Click to enlarge Some …

Continue reading ‘A History of Bubbles’ »