Searching for Signs

Chart of the Week for August 9-15, 2002

Lost in all of the bad news surrounding the domestic equity markets, is the fact that since 1970 the historical returns for stocks are almost 50% higher than those of bonds. For the ten years ended July 31, 2002, stocks as represented by the S&P 500 Index returned 10.1%, while bonds as represented by the Long-Term U.S. Government Index returned 9.0%. This convergence of returns has happened three times since 1970. In each instance, subsequent stock returns have exceeded bond returns. Could this be another sign of economic recovery?

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