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Investing Blog Roundup: Time and Equity Risk

This week I came across a study (done in 2009) by Vanguard, that I found quite interesting. It focuses on how investors perceive stock market risk to change over time. For example:

  • 26% of respondents believe that stocks will always outperform bonds over a period of 20 years or more.
  • Investors with a 4-year college degree or more were significantly more confident in stocks’ likelihood of outperforming bonds than were investors with less education.
  • Male investors are far more confident than female investors about the likelihood of stocks outperforming bonds.

I’m not sure what to do with such information. But it’s interesting nonetheless. :)

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Comments

  1. Thanks for the link Mike!

  2. I wonder how many of them are really confident that stocks will out-perform or really WANT them to out-perform?

    Thanks for the mention!

  3. Like you say interesting information but what do you do with it? In my view it brings into focus one aspect of investor psychology and reinforces the notion that the “market” is the sum total of investor psychology to be judged neither rational nor irrational.

  4. I read that study from Vanguard as well – and my first inclination is to determine if the 26% (and male college grads) are correct. However, the only thing we can do is determine if they have been correct in the past… and past performance doesn’t guarantee future results, as we all know. With that in mind, and given that I never met a spreadsheet I didn’t like, I may have to do my own analysis on the history and see what shakes out. I suspect that I’ll find that “always” is just a high percentage, but until I check it out I won’t know for sure… interesting exercise nonetheless. I’ll post my results at some point in the future, whatever they turn out to be.

    And thanks for the link, once again! Keep up the great work.

    jb

If you want to discuss this article, I recommend starting a conversation over at the Bogleheads investing forum.
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