Stocks and Bonds

Stocks and bonds are two types of investment vehicles, both offering pros and cons in regards to investment objectivies. With stocks being a more aggressive, more speculative investment vehicle, offering high risk and high return, and bonds, a conservative investment offering a set, small yet safe yield, offer their own bonuses. For long term capital appreciation, however, stocks trump bonds in terms of total return. Total return is a metric that needs to be taken in account considerably. While bonds offer safety and security (two things investors look for when trying to find a vehicle of investment that meets their objectives), stocks offer total returns that are statistically higher than those on bonds, long term.

Of course, this is not taking into account that a long-term reccession and/or bear market could cause little or no total return to be made on Webdesign equity investments; in that case, bonds, in a long term period (20 years or so) would outperform equities considerably. However, one can predict with such clarity and certainty that bonds will outperform stocks, or vice versa. Hence, to achieve alpha (a reference to getting to best total return possible), one must speculate, take risk, and assume nothing. Assuming total returns that meet one's enhanced expectation is something that should never be assumed. Remember past returns are no clear indicator of past results; you must go out on a limb, on a wing and a prayer, for lack of a better word. Stocks offer statistically a higher total return than bonds but that all depends on wheather or not the next 20 (twenty) or so years turn out to be years of economic growth/expansion. If the economy stagnates, and equity stock market investments see no substantial total return, bonds will be the victor in this deep debate.

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