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The problem with most who post on the bond board is that they don’t read the basic investment literature. They believe what Wall Street and the mutual fund industry want them to believe, rather than do their own thinking. Thus, any criticism of their beliefs is regarded as a personal attack, and the board is hugely polarized between those whose do their own bond investing and those whose who never venture beyond the putative shelter of bond funds, CDs, and TIPS. Such is life.

The attached spreadsheet might be cryptic. But the numbers are there. Unfortunately, due to the short time frame and the character of markets during those months, the comparison is nearly meaningless. Dart-throwing would have produced good returns, whether the targets were stocks or bonds.

On a one-to-one basis, any competent bond fund manager (and there are a lot of them) could kick my butt up and down the hall. Ditto any competent stock investor. However, fund managers get sabotaged by stupid shareholders, and “average” stock investor sabotage themselves. (During the years that the broad indexes were averaging 11% something, average investors’ returns were 3.8%.) So beating individual investors or the fundies isn’t hard to do.

What isn’t hard to do, either, is to achieve a real rate of return with bonds, even when “real rate” is defined as returns minus taxes and the real rate of inflation, not the manipulated CPI number.

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