Re: [Pen-l] Performance of gold, SP500, and 30-Yr T-Bond in last 5 years

[Laurent GUERBY <laurent@xxxxxxxxxx>]

On Fri, 2009-01-30 at 23:12 -0500, Sabri Oncu wrote:
> This is not a good graph Julio, because it is comparing oranges and
> apples. S&P and Gold are fine but that 30-year bond is not, because
> while the S&P and Gold performances in that graph are measured in
> units of return, the 30-year bond performance is measured probably in
> terms of the "on-the-run" 30-year bond yield, which is, by the way,
> semi-annually compounding. For a more meaningful comparison, you need
> to replace that 30-year bond with a long-term US Treasury ETF, if you
> can find one, so that all performances are measured in returns. If you
> do what I suggest, we will see that  in the same period the long-term
> treasuries did quite well too. It is for sure that they did way better
> than S&P but I don't have a feel for how they did relative to Gold,
> although I don't think they did that miserably: their performance
> should be in the range from 40% to 60% or so in that five years.

Another thing that is misleading is that the S&P is a "best of"
index, that is good performers come in the index with time
while low performers get excluded. To be fair with the
bonds more than one maturity should be used and use
similar weighting than S&P use for shares.

(And take what the jargon calls "total returns".)

Laurent


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