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 world history.””
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.
Recognize bonds’ limited real return potential.
Themes
Mood
Type
When to use this quote
- retirement planning
- portfolio diversification
- economic forecasting
- policy analysis
Key Concepts
Questions to Reflect On
- What alternatives offer better real returns?
- How should investors adjust for inflation risk?
Assumes past inflation trends will continue, which may not hold.