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Customer Quote by Jeremy J. Siegel

“At the end of 2012, the yield on nominal bonds was about 2 percent. The only way that bonds could generate a 7.8 percent real return is if the consumer price index fell by nearly 6 percent per year over the next 30 years. Yet a deflation of this magnitude has never been sustained by any country in…” quote by Jeremy J. Siegel
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““At the end of 2012, the yield on nominal bonds was about 2 percent. The only way that bonds could generate a 7.8 percent real return is if the consumer price index fell by nearly 6 percent per year over the next 30 years. Yet a deflation of this magnitude has never been sustained by any country in world history.””

Jeremy J. Siegel

About This Quote

Source Book: Stocks for the Long Run, 2nd Edition, 2005

Historical data shows that achieving high real bond returns would require impossible deflation, highlighting bond risk.

In simple terms: High bond returns need unrealistic deflation.

Key Takeaway

Recognize bonds’ limited real return potential.

Themes

finance inflation investment risk

Mood

analytical cautious

Type

educational strategic

When to use this quote

  • retirement planning
  • portfolio diversification
  • economic forecasting
  • policy analysis

Key Concepts

real returns deflation bond markets

Questions to Reflect On

  • What alternatives offer better real returns?
  • How should investors adjust for inflation risk?
A Different Perspective

Assumes past inflation trends will continue, which may not hold.

2.7 out of 5 (9 ratings)

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