Treasury Bonds

Slated to Outperform

U.S. Stocks?

YES!

John P. Hussman, Ph.D.

President, Hussman Investment Trust

January 2025

Realize that a shortfall of -11.0% versus bonds seems preposterous and implausible, though I haven’t been a stranger to seemingly preposterous and implausible estimates at the extremes of previous market cycles over the past 40 years. 

If one wishes to make the implications more tolerable, one can narrow the gap by several percent with heroic but not altogether impossible assumptions about profit margins and growth rates. Unfortunately, my impression is that one has to dispense with history altogether to garner more comfort than that.

On December 6, the S&P 500 set the most extreme level of valuations on record, exceeding both the 1929 and 2000 market peaks on measures that we find best-correlated with actual, subsequent 10-12 year S&P 500 total returns across a century of market cycles.