Long term bonds… A Wealth of Common Sense

Here is Ben Carlson, A Wealth of Common Sense, on 30 year treasuries:

“Here are the returns from 1926-1980 and 1981 through the end of July 2019:

For close to 40 years now, long-term bonds have given investors nearly 10% annual returns. The S&P 500 has done 11.2% per year since 1981. The worst drawdown since 1981 for long-term bonds was roughly 16%. The S&P 500 did more than that in a single day in 1987 and has been cut in half twice in that time.

Long-term bonds also had lower volatility than stocks from 1981-2019 (10.9% vs. 14.8%). During the bond bull there were just 8 down years out of the past 38 and only two of those down years were of the double-digit variety. There were 16 years with double-digit gains, meaning much of the reported volatility comes not from the downside, but from big up years.”