Surprise! In the last 25 years, bonds have given better returns than equity

[russellmanofgod]

https://twitter.com/i/web/status/1249613106034003968

Returns till March 31st 2020

1 year : Equity- -26%. Gsecs-12.3%

10 years : E- 0.3%. GSecs - 9%

25 years : E- 9%. Gsec - 10.6%

Disclaimer : I have not put together the data myself. I have only taken it from the above Twitter post by a person with decent credentials

 

[bigdad77]

@russellmanofgod Further proof that stats can be made to make any point you want

 

[joe1997]

@bigdad77 "You can torture any data until it agrees with you."

 

[bigdad77]

@joe1997 Haha yep!

 

[russellmanofgod]

@bigdad77 Even if you leave out the Covid Crash , the returns in Dec 19 also are higher. In Bonds.

 

[nischansr]

@russellmanofgod Now start from a different point. And another. And another until you have run out of points. Now what do you find?

That's what he is pointing out. At this is a single data point highlighted to sell a story. The average reality tells a whole different story.

Edit: I wish people would stop down voting you.

He's asking a genuine question. It's okay for someone to be wrong. Many people would simply stop asking questions if downvoted - that helps nobody

 

[rooted]

@russellmanofgod Can you do your calculations till Jan 2020. Black Swan events don't always happen.

 

[gloriouswonders]

@rooted TBH COVID is not a Black Swan event. At least according to the guy who defined what a Black swan event is: https://www.fastcompany.com/90475793/why-the-coronavirus-crisis-is-a-gray-rhino-and-not-a-black-swan

"the proper metaphor for the crisis is a “gray rhino,” which refers to highly probable but neglected threats that have an enormous impact. It was coined by Michele Wucker, a policy analyst who came up with the term after the 2012 Greek financial crisis."

Nassim: https://mothership.sg/2020/04/covid-19-black-swan/

 

[dre54ger]

@gloriouswonders Nassim Taleb is arrogant and a lot of his arguments and conditionals stem from arrogance. No doubt he's brilliant.

But I think in this case that retrospective predictability would not have accurately ascertained the severity of the pandemic, hence, I believe it is a black swan.

 

[ampworship]

@dre54ger What exactly is "arrogant" about his statement? Seems perfectly reasonable to me.

 

[dre54ger]

@ampworship Not this statement per se, but his arguments on Covid-19 in general and his stances on other things.

 

[mitosblog]

@rooted Doesn't always happen. But must be accounted for in every investment thesis. We don't live in a binary world.

 

[rooted]

@mitosblog Well, this is a hypothetical scenario of noob retail investors who would sell in a market crash or someone who was forced to sell in the crash. Otherwise this is moot.

 

[russellmanofgod]

@rooted I may not be an expert in reading graphs.

But the graph put up by the person on Twitter shows - even in DECEMBER 2019 the returns are HIGHER in BONDS for the last many years. Same goes for Dec 18.

 

[jorge_costanza]

@russellmanofgod Didnt freefincal already debunk this?

14% bonds were not uncommon in the 90's.

Today you cant say the same...

 

[derek1111]

@jorge_costanza Yes. Also he didn't use TRI. Plus cherry picking of data points.

 

[russellmanofgod]

@jorge_costanza If so, would love to see it. Will look around for that

 

[jorge_costanza]

@russellmanofgod https://in.investing.com/rates-bonds/india-10-year-bond-yield

Go to the chart and take a time frame, MAX time frame etc... in 90-2000 year, 12-14% bank FDs were norm.

 

[russellmanofgod]

@jorge_costanza What was equity return at that time ?

If equity return was low at that time and interest was higher- then today it is inverse.

Am not arguing - just want to know the rate of return of equity at that time.

 

[ronaldus]

@russellmanofgod It's a weird comparison to make, technically it's correct but markets are always cyclic.

We will always run into lows once in a while which makes way for such math. But the conclusion definitely shouldn't be that one should not invest in Equity.