There is a popular notion held, and spread, by commentators and advisors…
Stocks outperform bonds over the long run.
There is only one issue with this assumption; it may not be entirely accurate.
“…according to research by Ibbotson Associates, as reported in “USA Today” last year, bonds actually outperformed stocks over the past 30 years. Ibbotson’s bond index, comprised of a broad cross section of bonds, returned 11.03% per year on average over the previous 30 years, compared with a 10.98% return for the S&P 500 during the same period,” according to James A. Klotz, FMSbonds, Inc. President.
Our friends over at FMSbonds, Inc. discuss this matter in more detail. For more of the story, head over to the FMSbonds website.
On this day, March 14, in 1879, Albert Einstein was born.
You may know Einstein by his signature wild grey locks, E=MC², the first atom bomb, or this image…
Regardless of how you know him, you are familiar with the fact that he led an intellectual revolution that changed the way we consider certain things. This statement can even hold water in the financial world.
Einstein’s Theory of Relativity is crucial in the field of physics, but how can it be applied to investments? Maybe Investopedia can help us out…
“When considering the problem of gravity, Einstein encouraged people to picture a man in a box that is traveling through space at a uniform velocity. For example, Person A on earth and Person B in a rocket – unaware that he is in a rocket – will both draw the same conclusions about their planet’s gravity. When they drop an object, it falls toward the floor. However, if the rocket stops moving, Person B will realize that he is wrong – in the split second before momentum smashes him against what he thought was the ceiling.
This theoretical situation is easily extended to the stock market. If we imagine gravity as the true value of a stock (or the true worth of the company it represents) and the rocket as a shooting star (a stock with a value that quickly inflates without reference to the value of the underlying company) we can apply relativity to tell the difference.”
For more of the story, head over to Investopedia.
In today’s economy, there are constantly new market predictions virtually on a day-to-day basis. So, what is the next hot topic?
James A. Klotz of FMS Bonds, Inc. discusses “The Great Rotation” of investment dollars from bonds into stocks in 2013.
“The theory, as espoused by Bank of America, among many others, posits that persistent market volatility in the last decade, which prompted investors to seek refuge in the bond market and cash investments, would give way this year to more sustained growth in most economies.” writes Klotz.
“Moves by governments to address deficit spending along with a rise in consumer confidence will ultimately lead to a massive flow of investment dollars into equity funds from the safe haven of bonds.”
Head over to the FMS Bonds, Inc. website to read more on this coming rotation.
As the old adage goes, “Anything you can do, I can do better.”
Does that same famous phrase hold true for investments?
Lucky for us, rplan has provided us with an infographic to help tackle this very topic. So, who comes out the winner? Click and find out.
Sorry, no spoilers here…