Michael
Mar 17th 2009, 03:27 PM
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.
...
“Over the last 30 years there’s been no risk premium,” said Douglas Cliggott, manager of the $81 million Dover Long/Short Sector Fund, which has beaten 92 percent of its peers this year. “It’s potentially earth shattering because the equity market hasn’t delivered the goods.”
The returns are a reversal from October 2007, the peak for global stocks. The MSCI gauge rose 2,845 percent to a record 17 months ago, more than double the 1,156 percent gain for Treasuries from 1979.
Source (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ)
In other words, just about everything that every market analyst and stock trader on Wall Street has been saying for the last 30 years is bullshit. If you invested entirely in long bonds, you can beat the equity markets.
That just shows that a large percentage of the 'votility' in stocks is little more than hot air (stocks are much more volitile than corporate profits). Some might speculate that it is the massive (and automated) trading operations of the big Wall Street firms that increases the votility of stock trading. I guess the Wall Street boys need to do trades just to prove they are doing something. All that stock churning just muddies the waters and doesn't actually add any value.
Indeed, it looks like the 'churn' might be the culprit in killing the equity premium over bonds.
I suppose it wasn't ironic enough that the highest paid superstars of Wall Street are the idiots that wiped out trillions in shareholder value. We now have to address the fact that these same high paid superstars have been padding their incomes by 'churning' stock buys just to make themselves look good (and sucking the profits out of equities in the process) - and claiming they are worth the money based on the massive profits that don't actually materialize... :ummm:
...
“Over the last 30 years there’s been no risk premium,” said Douglas Cliggott, manager of the $81 million Dover Long/Short Sector Fund, which has beaten 92 percent of its peers this year. “It’s potentially earth shattering because the equity market hasn’t delivered the goods.”
The returns are a reversal from October 2007, the peak for global stocks. The MSCI gauge rose 2,845 percent to a record 17 months ago, more than double the 1,156 percent gain for Treasuries from 1979.
Source (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR8JREWPNUyQ)
In other words, just about everything that every market analyst and stock trader on Wall Street has been saying for the last 30 years is bullshit. If you invested entirely in long bonds, you can beat the equity markets.
That just shows that a large percentage of the 'votility' in stocks is little more than hot air (stocks are much more volitile than corporate profits). Some might speculate that it is the massive (and automated) trading operations of the big Wall Street firms that increases the votility of stock trading. I guess the Wall Street boys need to do trades just to prove they are doing something. All that stock churning just muddies the waters and doesn't actually add any value.
Indeed, it looks like the 'churn' might be the culprit in killing the equity premium over bonds.
I suppose it wasn't ironic enough that the highest paid superstars of Wall Street are the idiots that wiped out trillions in shareholder value. We now have to address the fact that these same high paid superstars have been padding their incomes by 'churning' stock buys just to make themselves look good (and sucking the profits out of equities in the process) - and claiming they are worth the money based on the massive profits that don't actually materialize... :ummm: