Don’t expect stocks to beat bonds

Don’t be surprised if bonds far outpace stocks over the next several years.

That’s because the period since March 2020 has experienced just the opposite, and history teaches us that the equity premium (the amount by which stocks beat bonds) regularly swings from one extreme to the other. And over the 41 months since March 2020 this premium has been very extreme: You have to go back to the 1950s to find another occasion when the S&P 500 SPX over a 41-month period beat intermediate-term Treasurys by more than today’s margin.

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