<p>Yes. The relative performance of stocks and bonds depends on monetary policy. Stocks benefit from low interest rates and inflation while bonds benefit from high interest rates. Over the 19th century for example, stocks deflated along with the overall economy while bonds yielded a small positive return.</p>

CC BY-SA 3.0
2016-02-18T08:22:10.673Z
2016-02-18T08:22:10.673Z
D J Sims
<p>The fashion for different investment instruments changes over generations; and with them, so do the returns.</p>

<p>In England, it was illegal to form a joint-stock company, for about a century (1720-1825), after the South Sea Bubble.</p>

<p>So yes, looking at the performance of joint-stock companies is very much dependent on the time interval involved.</p>

CC BY-SA 3.0
2016-02-18T15:58:27.307Z
2016-02-18T15:58:27.307Z
410 gone
<p>When looking at <a href="http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html" rel="nofollow">historical return patterns</a> for investments, one can clearly see the stellar performance of equities over the long haul. That being said, we know that we can center in on certain 20-25 year time spans throughout that century where the return characteristics look drastically different.</p>

<p>If this is the case, then couldn't the entire 100 year period demonstrating the attractive returns for stocks be an aberration over hundreds or thousands of years, especially considering how <a href="https://en.wikipedia.org/wiki/Gross_world_product#Historical_and_prehistorical_estimates" rel="nofollow">global growth has changed</a> since pre-history? And how could we hope to know? Is there a statistical/probabilistic way to be understand whether our "long-run" returns are in fact indicative of some sort of deep principle regarding average returns in a market economy?</p>

CC BY-SA 3.0
2016-02-18T00:41:41.447Z
Are you familiar with the idea of the color grue? https://en.wikipedia.org/wiki/New_riddle_of_induction
Giskard
CC BY-SA 3.0
2016-02-18T16:50:10.853Z
This issue you raise is sometimes called "the reverse peso problem".
BKay
<financial-economics><stock-market><markets><financial-markets>
We see stocks outperforming things like bonds in the long run (past 100 years), but could this be an artifact of that particular 100 year timeline?
Pete1187
# We see stocks outperforming things like bonds in the long run (past 100 years), but could this be an artifact of that particular 100 year timeline?

(Asked by: username_0 on 2016-02-17)

When looking at [historical return patterns](http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html) for investments, one can clearly see the stellar performance of equities over the long haul. That being said, we know that we can center in on certain 20-25 year time spans throughout that century where the return characteristics look drastically different.

If this is the case, then couldn't the entire 100 year period demonstrating the attractive returns for stocks be an aberration over hundreds or thousands of years, especially considering how [global growth has changed](https://en.wikipedia.org/wiki/Gross_world_product#Historical_and_prehistorical_estimates) since pre-history? And how could we hope to know? Is there a statistical/probabilistic way to be understand whether our "long-run" returns are in fact indicative of some sort of deep principle regarding average returns in a market economy?

**Tags:** financial-economics, stock-market, markets, financial-markets
> **Comments:**
> **username_1**: Are you familiar with the idea of the color grue? https://en.wikipedia.org/wiki/New_riddle_of_induction  
> **username_2**: This issue you raise is sometimes called "the reverse peso problem".  

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## 2 answers

### Answer by username_3 on 2016-02-18. Score: 1 | Accepted answer

Yes. The relative performance of stocks and bonds depends on monetary policy. Stocks benefit from low interest rates and inflation while bonds benefit from high interest rates. Over the 19th century for example, stocks deflated along with the overall economy while bonds yielded a small positive return.


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### Answer by username_4 on 2016-02-18. Score: 0

The fashion for different investment instruments changes over generations; and with them, so do the returns.

In England, it was illegal to form a joint-stock company, for about a century (1720-1825), after the South Sea Bubble.

So yes, looking at the performance of joint-stock companies is very much dependent on the time interval involved.


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