Why Overpaying For Stocks Can Still Beat Bonds

There is a very important reason why this site focuses on individual companies instead of, say, gold or treasury bonds. The reason is simple: actual businesses come with a growth component that does not exist when you buy gold or treasury bonds. An ounce of silver, gold, or palladium in 2114 will still be…an ounce of gold, silver, or palladium. A 5% payment on a U.S. bond, or a Wells Fargo corporate bond, will still be returning 5% of your cash outlay next year, the year after that, and until the specified duration of the terms comes to an end.

But I was curious: If you were seeking the same total returns with stocks as bonds, what is the handicap between a basket of American stocks, measured against a basket of corporate bonds and US Treasury bills? It’s a question that gets ignored because the answer is necessarily imprecise—what’s the … Read the rest of this article!