No. of Recommendations: 1
The notion that stocks might earn say 6% real annualized returns vs say 1% real annualized returns from long-term US treasury bonds over the long haul really does seem like too much of a "free lunch."
Two questions for you. All rates real, not nominal.
1. Should corporate bonds, of the same duration, pay higher interest rates than government bonds?
2. Should investors demand higher required rates of return from stocks than from corporate bonds?
That should tell you why a positive equity will always exist over the long term.
