Equities grow much faster than bonds in the long-term. The risk premium is not enough to explain the magnitude of the difference. This is known as the equity premium puzzle.
I've read an eye opening [article](philosophicaleconomics.com/2013/12/the-single-greatest-predictor-of-future-stock-market-returns/) recently which lead me to the thought that maybe the reason why equities outperform is that debt and money expansion is faster than equity expansion. So more and more cash chases relatively constant amount of equity. Seems quite obvious and trivial. Is this correct?
Also, side note, as a beginner investor, this is made me realize that gold is doubly-inferior "investment" compared to equities: it generates zero cash and its supply is growing.
Submitted April 22, 2018 at 11:02AM by falconberger https://ift.tt/2F4SzjH
