Figure 2-5
Rolling 10-Year Data
	1930-2009 (%)
---------------------------------------------------------------------------------
				Ten-Year
		Median		Return Range
		Return		2/3 of the Time
		---------------		---------------------
Bonds		5.5		+2 to +9
Stocks		10.8		+5 to +16

Once again, these data have not changed significantly, based on the inclusion of performance for 2007 and 2008, which is not surprising given how long the period is. Figure 2-5 suggests that the returns from both bonds and stocks have been higher than inflation, stocks have had a higher return than bonds, and the normal range of returns for both is positive or very positive.

These data support the argument that these two asset classes must play key roles in achieving investment results which, in combination with aggressive asset accumulation, will provide the level of retirement security you desire. 

Decade Perspective (as of 3/31/10)

As of the end of the decade from 1990-1999, stocks had outperformed bonds for six decades in a row (see page 25 in Chapter 2 of the book). The only decade in which bonds outperformed stocks was the decade from 1930-1939, the period of the Great Depression.  Even during this period, the compound annual return for stocks was only -0.1% per year - bonds had a compound annual return of 4.9%. This is another demonstration of the superiority of stocks compared to bonds over the long term. However, it is interesting to note that, while bonds have underperformed stocks, bonds have had positive returns for the last five decades. 

However, the decade which started in 2000 was quite different. The compound annual return for stocks for this decade has been -1.0%, while the compound annual return for bonds has been 6.2%.

There are two  important observations which can be made about what has happened in this decade: (1) bonds can outperform stocks over ten-year periods (it happened in 1930-1939, as indicated above), although it doesn't happen very often, and (2) the compound annual return for stocks was close to zero. That's not good, but once again, as in the 1930-1939 period, it is not significantly negative. There is no decade in which the absolute return for stocks was significantly negative

What does all this information about decade returns mean for the future, because that's the really important issue at this point? The answer is "not very much". The sample size is too small to infer anything about the predictability of the performance for one decade based on what happened in the previous decade. However, the decade returns do provide useful perspective on what has happened and how long-term returns actually develop. 

The outlook at any time for the next decade, using the approach provided in Chapter 10, is provided in Updates - page 1 above.