[adios]

The advice about stocks being a better investment than bonds stems from a couple of things. First of all, over the long haul (which isn't that long [img]/images/graemlins/smile.gif[/img]) stocks have outperformed bonds by quite a wide margin. One fact that should be noted is that the measurements assume a reinvestment of dividends. I'll leave it to you folks to decide whether or not stuff like a company buying back stock is preferrable to receiving dividends. When people state that stocks have outperformed bonds they mean that the valuation of the stock market as a whole has outperformed bonds in the long run. The relative outperformance of stocks over bonds is called the equity risk premium. To make a long story short, the magnitude of the equity risk premium as measured by past performance of stocks and bonds does not appear to be justified given the performance of the stock market for long holding periods (20 + years) i.e. that the stock market over long (20+ years) holding periods is not volatile enough in value to warrant such a risk premium. Remember we're talking about long holding periods. There is much debate in financial circles and academia as to why this has been the case and whether or not it will continue in the future. I guess we'll have to wait about 50 years to find out [img]/images/graemlins/smile.gif[/img].

A couple things appear to be obvious to me. If you really want to capture the equity risk premium i.e. achieve the relative better performance of stocks over bonds, one has to buy the market by buying SPY or the appropriate Vanguard funds or whatever and be willing to hold it for a very long time. Also one has to do so on a certain amount of faith, perhaps a lot of faith. When the market hit the skids in the last recession, I believe that over a previous 20 year period bonds had outperformed stocks. I'm fairly certain that where the market stands now going back 20 years stocks have not outperformed bonds by a significant amount. Of course the last 20-25 years has been the era of disinflation and the next 20-25 years may be quite a bit different from a monetary viewpoint. A long winded answer in stating that Mark Cuban may very well be correct. The jury will be out for quite some though.