Why Invest in Bonds!

Abstract

Typically financial planners advise investors to diversify, invest some of your money in bonds and some of our money in common stock. Is this sound advice? This paper examines thirty-five different holding periods and compare the return on large company common stock portfolios to the returns on long-term corporate bond portfolios. Each of the holding periods is thirty years long. The first holding period is 1940 through 1969, the second holding period is 1941 through 1970. The last holding period is 1974 through 2003.