The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing


Subject:  Re: Stock vs. Bonds (& Peter Lynch) Date:  9/15/1998  9:10 PM
Author:  TMFPixy Number:  5447 of 97961

John, you ask:

In this months "Stages" magazine, Peter Lynch maid a claim about bonds that surprised me and I hope that someone here (TMFPixy, maybe) can explain.

Lynch said, "In the 10 years from 1972 to 1982, for example, both government bonds and money markets outgained stocks."

Do you think Lynch is ignoring dividends paid out by stocks, or do you think he is counting both capital gains and dividends? I remember reading (I'll try to check my library tonight) that stocks have outperformed all other "normal" classes of investments in any 10 year period since 1920.

No, he's not. For the 10-year period ending 12/31/82 the S&P 500 total return averaged 6.7% per year. Government intermediate term bonds averaged 8.0%. The money market averaged 8.5%. But what Lynch didn't tell you is that inflation averaged 8.6%. In effect, then, nothing won in terms of purchasing power in that decade due to double-digit inflation.


Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us