Bridge over ocean
1 March 1997 Financial Analysts Journal Volume 53, Issue 2

Will Stocks Continue to Outperform Bonds in the Future?

  1. Edward F. Renshaw

Valuation of the earnings and dividends associated with the S&P 500 Composite Stock Price Index has changed over time. These changes, in conjunction with record amounts of retirement money that are now being funneled into mutual funds and wider fluctuations in the price of corporate bonds, suggest that the earnings and dividend price ratios for representative stock market averages may someday be reduced to the point where the before-tax returns on equities will not be greater than the returns on corporate bonds.

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