Bonds vs Stocks

Treasury rates have risen significantly over the past year. For example, the 10-year Treasury rate has climbed higher than it’s been for over a decade:

If we look back further, yields may be settling back into historical norms, in contrast to the exceedingly low rates of the 2010s:

Does the rise in yields make bonds relatively more attractive? Sure. Should your portfolio shift to a bond-heavy allocation? Ben Carlson argues that while bonds are now better positioned to provide portfolio diversification, the long-run outperformance of stocks remains compelling. Carlson points out that for most 10-year periods, stocks provided better returns, often by wide margins:

While long-term history heavily favors equities, stocks have at times had poor decades, such as the 1970s and 2000s. At such times, as Carlson observes, bonds provided a useful portfolio ballast:

With the notable exception of 2022, when both stocks and bonds cratered, bonds usually rose during down years for stocks. With the 10-year Treasury yielding over 5%, bonds are in their best position in years to provide portfolio support in the event of an equities downturn. For those investors concerned about a possible AI bubble, bonds have become an increasingly viable option for portfolio diversifi

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.