Barely. And with a tremendously rocky ride.

Spurred by the most recent weekly piece by John Hussman (, I checked the yearly and cumulative nominal total return figures for the S&P 500 and a few US Government bond indices since 2000. The results can be found in the table below (data from December 31 1999 to February 27 2015):

  Annual Return Cumulative Return
S&P 500 Total Return 4.4% 91.3%
US Government 1-3 Years 3.4% 64.9%
US Government 3-5 Years 4.9% 107.7%
US Government 5-7 Years 5.9% 138.8%
US Government 7-10 Years 6.5% 160.1%
US Government 10+ Years 8.5% 243.0%
US Government All >1 Year 5.5% 126.5%

Source: Bloomberg; Bloomberg/EFFAS US fixed income indices.

Apart from the shortest maturity bucket, all Government maturities provided a better return than large-cap equities; in the case of the longest bond maturities – arguably the only ones comparable to equities in terms of price risk and duration – substantially better.

During the period in question, the S&P had two negative runs of about 50% each: one, of -47.4%, from September 2000 to October 2002; another, of -55.3%, from October 2007 to March 2009. Remember: these are nominal total return figures, which include dividends (reinvested immediately in the index) but not the impact of inflation.

As Hussman points out, the performance of the S&P has been achieved only because current prices have reached valuations that represent the second most expensive level historically recorded. The following graph is taken from a recent publication of Doug Short ( While it certainly does not provide a trading signal or an indication that prices will soon revert to more acceptable levels, it does warn of likely very low returns for equities over the next 5-10 years. That is, if you can keep still while the ride evolves and/or if you have the ability to pick tops and bottoms – two very big “ifs”.




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