US stocks vs. bonds: Which historically comes out on top?

We're going to send it on over to our own Jared Blikre for today's Stocks in Translation. Hey, Jared.

Market volatility is down. Tech stocks are coming off their second best week since 2022. But let's zoom out and look at how stocks and bonds have performed relative to each other since the very first days of the United States over 200 years ago. I'm Jared Blikre, host of Stocks in Translation, and if we're going to compare stocks to bonds, we need to define something called the equity premium, and we're going to do that right here. Uh, the equity premium or stock premium is the extra return that stocks provide over safe bonds, rewarding investors for taking on greater risk. And by safe bonds, we're talking about generally government bonds, and then the US, those are US government bonds, the benchmark for the entire world in terms of safety. And now I want to get to our beautiful chart of the day. This goes back all the way to the early 1800s, and it's based off data that actually begins in 1793, the very first days of the Constitution. And this is stocks versus bonds adjusted for inflation over a rolling 20-year period. And you can see over the time period in the very early days here, we have a negative value. That means that bonds were actually doing better than stocks. But then stocks took over, and basically, for the last 200 years or so, a little bit less than that, we have seen stocks outperforming bonds over these 20-year rolling periods. And I think it's notable that if we want to do a little bit more technical analysis, which I like to do here, we see a breakout of this long-term downtrend in this relationship. So that might mean that going forward, we would expect stocks to outperform bonds. And what also adds to this information, some additional information that adds to this point is the 10-year T-note yield going all the way back to the late 1980s. And in fact, this trend actually began in the early 1980s. This just shows a very steep downward trend that has been broken out of in the last few years. And when that happened, and let's see if we can circle that down here, that kind of marked a sea change in the markets. That was a new trend that we've seen develop here. And going forward, we might see it come down a little bit, and let's remember that yields move inversely with the price of bonds. But we might not expect bonds to do as well in the coming months and years if this is in fact a secular trend change. So this kind of cast some shade, cast some doubt on the 60-40 portfolio as we've been experiencing it for the last 40 years. Just a little food for thought there. So tune into Stocks in Translation for more jargon busting deep dives. New episodes on Tuesdays and Thursdays on Yahoo Finance's website or wherever you find your podcast. Maddie?

All right, Jared. Thank you so much. Appreciate it.