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Norwell's  Instablog

I am a long term investor, buying stocks as a teen through an account I begged my father to open. I am a software developer by trade. I have an Accounting degree and an MBA along the way, so I do really understand the numbers involved. I tend to like investments that are out of the ordinary and... More
  • Treasuries vs Stocks
    I was looking at the Schwab site where I saw an article describing the relative safety of treasuries versus stocks.  The data looked intriguing:

     2009 YTD*2008  2007  2006  2005  2004  2003  2002  2001  2000  
    S&P 50011%-38%4%14%3%9%26%-23%-13%-10%
    Treasuries-5%14%9%3%3%4%2%12%7%14%
    Source: Bloomberg

    So, at first glance, yes treasuries show low returns versus dramatic results for stocks.  But then I started thinking what happens when you compound the results over some time period and look at the result of your imaginary $10,000 starting balance.  The results were dramatic:

     5 Years10 Years
    Stocks-16%-31%
    Treauries+25%+81%

    I don't have other sets of numbers to look at for different time periods.  The results shown are very simplistic - assuming you can magically invest a fixed amount into something called "S&P500" and "Treasuries".

    I think the biggest factor here is the returns are low for treasuries but there are very few negative return years.

    The results appear to show more than treasuries being a "safe" investment.  It looks like treasuries ARE an investment where stocks ARE NOT.

    I have positions in a variety of stocks.  I have no positions in treasuries (yet).
    Sep 01 06:04 pm | Link | Comment!
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  • Thanks for adding that interstitial to the home page. I am sure you'll get a whopping return for adding this annoyance to a good site.
    May 26, 2009
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