- Stock and bond returns in the 2010s are near historic averages.
- Stock and bond returns per unit of risk are well above historic averages
- There are plenty of stories in the details of the past 94 years, 1926-2019
The last year of the current decade is almost over. It’s about 95% complete, close enough to estimate how 2019 will turn out. In the following we present a decade-by-decade review of US stock and bond returns over the past 9 decades, followed by a detailed review of stocks, bonds, T-bills and inflation.
Stock and bond returns over the past decade are near their respective norms, but the returns per unit of risk (Sharpe Ratios) are well above. It’s been a good decade with average returns for below average risk.
Stocks earned 13.39% per year, exceeding their 10% average return. Bonds earned a little less than their 6% average return, delivering 5.13% per year. On a risk-reward basis, stocks tripled the .35 average, earning 1.03% per unit of risk (standard deviation). Similarly, the bond Sharpe ratio of .94 is more than double the historic average. Also of interest, the bond Sharpe ratio for the past decade is the highest in the post-war era.
There are more details in the following table. I leave it to you to seek out the stories that these results tell, and hope they’re helpful to putting history into perspective.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Ron Surz
Ronald Surz is co-host of the Baby Boomer Investing Show and president of Target Date Solutions and Age Sage, Target Date Solutions serves institutional investors, namely 401(k) plans. Age Sage serves do-it-yourself individual investors. His passion is helping his fellow baby boomers at this critical time in their lives when they are relying on their lifetime savings to support a retirement with dignity, so he wrote a book Baby Boomer Investing in the Perilous 2020s and he provides a financial educational curriculum.Ron Surz is president of Target Date Solutions, developer of the patented Safe Landing Glide Path, Soteria personalized target date accounts, and Age Sage do-it-yourself investing. He is also co-host of the Baby Boomer Investing Show.
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