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Bonds are not nearly as liquid as equities and thus have higher transaction costs, so the transactional cost of trying to beat the bond market is higher than the transactional cost of trying to beat the stock market.


Now, I'm one of the first to admit that bonds aren't my bag. But I know stocks. I also know how incredibly difficult it is to beat the SP500 stock index over the long term with stock-picking. It's a loser's game.

Why is beating the bond market easier than beating the stock market if the transaction costs are higher?
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