The Market Is Historically Cheap Again! Stock Yields Are Higher Than Bond Yields.
[The market has reached a relatively cheap point in history again! Stock yields exceed bond yields. 】CLEC Club Date of writing: September 05, 2019 Since 1960, bond yields have always been higher than stock yields (except
[The market has reached a relatively cheap point in history again! Stock yields exceed bond yields. 】CLEC Club Date of writing: September 05, 2019
Since 1960, bond yields have always been higher than stock yields (except for the years after the central bank cut interest rates in 2009, where stock yields were higher than bonds. And now.), because stock yields will increase, investors expect that the amount of future dividends on their investment will be higher than the dividends on bonds, and the short-term dividend yields can be tolerated if they are lower than bonds. Therefore, if the yield of stocks is higher than that of bonds, it is better than bond investment without waiting, so stocks are too cheap relative to bonds.
Now, the yield rate of stocks exceeds that of bonds, which means that if you hold a government bond for 30 years, the dividend will eventually lose to that of stocks. If you add in the growth in stock dividends, stocks are really cheap relative to bonds.
As shown in the attached picture! The SPY dividend is 1.95%; the 20-year bond yield is 1.77%; the 30-year bond yield is only 1.97%.
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