With stocks, all good investment stories begin in October. Bonds are no different. In October 1981, the federal government of the United States of America auctioned off thirty-year treasury bonds at a rate of 14.8%, the highest in its recorded history. At the time, the United States was steeped in annual inflation of 10.5%.
For those who anticipated the rise of a Paul Volcker figure, or at least had the sense that interest rates were more likely to decline over the coming decades than rise, and chose to purchase U.S. government debt, the results were some of the most impressive on a risk-adjusted basis.