Are stocks really riskier than bonds?

Follow    bakadesuyo on Twitter

Conventional wisdom holds that stocks are riskier than bonds; thus when the stock market becomes volatile, money flows from the stock market into the perceived safe haven of the bond market. In this article, we find that this notion is not necessarily accurate and might lead people to make incorrect investment decisions. In fact, intermediate- and long-term bonds are riskier than stocks when we measure risk by the coefficient of variation. We examine a case where an inaccurate perception regarding the relative riskiness of the two types of assets could play a part in what appears to be short-sighted and potentially costly behaviour of investors in financial markets.

Source: “Are stocks really riskier than bonds?” from Applied Economics, Volume 42, Issue 4 February 2010 , pages 403 – 412

Follow me on Twitter here or get updates via email here.

Related posts:

Can you get rich by insider trading — legally?

Do good Super Bowl commercials mean higher stock market returns?

Nature or Nurture: What Determines Investor Behavior?


Tags:
Posted In:
Post Details