One giant problem when comparing stocks to bonds - You have companies like Intel, Cisco, Apple, Johnson and Johnson, other drug companies and some oil companies with piles of cash and insignificant debt.
These tend to be like buying assets, and in many cases, these assets have some inflation resistance, or pricing power.
They can be considered a bit along the spectrum towards a low cost gold mine, when compared to the average manufacturing company. Certainly true for antibiotics and Intel processors.
A bond is a promise to pay.
I will take Intel stock over a California government bond ;-)
How about PetroBras, or Chevron vs. UK or US government bonds ?
JS may be right in those cases...
Another problem with bonds was that during the tech boom, the US Federal Government ran cash account surpluses, and discontinued the 30 year bond for a while, pulling down many other bond yields, including corporate bonds.
Another big problem - you are going to buy a stock or bond - make one decision - and not change it for 10, 20, 30 years ?
Say you picked Hewlett Packard, or better yet Sun Microsystems - you cold ride it up, then ride it back down for YEARS ? |
