NEW YORK (
) -- When their stock portfolios melted away last spring, some investors fumed at the research done by Roger Ibbotson. The founder of
was one of the first to argue that stocks outperformed bonds over long periods.
During the bull market of the 1990s, brokers decorated their offices with the famous Ibbotson charts, which showed that stocks rose relentlessly over the decades. That led countless investors to put most of their holdings in stocks.
But as markets collapsed in the first quarter of this year, the long-term results changed. For the previous four decades, bonds had outdone stocks. Complaining that the Ibbotson data had been misleading, investors began lowering their stock allocations.
Though his findings may have come under assault, Roger Ibbotson remains undeterred. He recently published an upbeat assessment, arguing that stocks will beat bonds by a significant margin in the future.
Those who scoff at Ibbotson's thinking should recall his first attempt at predicting market returns. The forecast came in 1974, a year when the
Dow Jones Industrial Average
was stuck at 800 in the middle of a brutal bear market. Ibbotson and his colleague Rex Sinquefield said the Dow would hit 10,000 by November 1999. The forecast seemed laughable at the time, but it proved dead-on when the Dow hit that mark in March 1999.
In his recent publication, Ibbotson notes that the performance of stocks during the past 40 years has actually been quite good. While bonds edged ahead in February, stocks resumed their lead soon after the rally began in March. During the 40 years ending in June, the
S&P 500 Index
returned 9.2% annually, compared with 8.5% for long-term bonds.