I think the conventional wisdom that stocks outperform bonds in the long run is extremely questionable. First, people always look at US when looking at the issue, but of course the US economy has been arguably the most successful one over the past century. Those who invested in Nikkei in late 80s will probably have to wait another 30 years or so before they see their stocks outperform bonds.

How's the market right now? Well, if you compare the earnings yield on the S&P with the yield on a 10Y tresury, what do you get? Around 4% for the treasury and P/E of around 20... so an earnings yield of 5%. So the equity risk premium which people traditionally say is around 7% is still at an extremely low level. I would say buying BBB corporate bonds at something like 200 over treasuries is a much better bet... a semi-arbitrage really considering corporate bonds and stocks are really claims on the same cash flows EXCEPT that bonds have a seniority option.

In my opinion, stocks still have some way to fall before they become attractive.