Question

Country : USA How much do you think the stock market will return over and above the Treasury10-year bond rate?

Explain, please

Answer 1

If I'm considering a time duration of 10 years, I think that stock market is not going to outperform 10-year treasury by higher margin, and it should be in the range of 4-5% when we will consider the outperformance of stock market to that of bond market.

The outperformance of 4 to 5% can be attributed to the the rational performance of stock market by defying all the odds related to the coronavirus concern but actual situation on the economic front is not that good and it will be reflected later when the market will be efficient enough to discount that damages done by the coronavirus and it would be leading to a lower economic growth because there is a expectation of an impending recession so these these recession are going to hurt the overall perspective the economy and I feel that stock market is going to correct from these levels and stock markets are not going to highly outperform the bond markets but when the recession is over,stock market is going to bounce back and I feel like this market is going to give a very good recovery so I feel that overall the stock market is going to outperform in a longer time frame and hence I have compared it with on a longer time frame and I feel that this will be providing with a mild rate of return on annualized basis, which will beat the rate of return of 10 year treasuries rate.