It Wasn't a Lost Decade for Everyone


Howard Gold Image Howard Gold Founder & President, GoldenEgg Investing

Would a 50/50 stock/bond split do as well as it has over the past decade?

Not likely. On January 1, 1999, the ten-year Treasury note yielded 4.65%, according to the Federal Reserve Bank of St. Louis. It hit 2.25% on December 31, 2008. With yields chopped by more than half, is it any wonder bonds rallied?

But according to Vanguard, when yields have been this low historically, that has "led to returns ranging from 1.3% to 2.9% annually over the next ten years."

Or, as Swensen put it, "We could well be at a point where investments in equities are going to produce returns.that are higher than what we've seen in the past five or ten years, and.where bonds are priced to produce lower returns."

History doesn't repeat itself, but the more truly diversified you are, the better off you'll be no matter what the market does. You'll really need to be patient, though. I'll get into that next week.

Howard R. Gold is executive editor of The opinions expressed here are his own.