Prof Scott Cederburg: Long-Horizon Losses in Stocks, Bonds, and Bills (EP.224)

<p>Are stocks and bonds good in the long game? What are the best long-term investment options? In this episode, we speak to Professor Scott Cederburg about the nuance surrounding the stock market, bonds, and other investment types in the long term. He has a Ph.D. in Finance from the University of Iowa and is currently the Associate Professor of Finance at Eller College of Management at the University of Arizona. His research focuses on the long-horizon performance of a range of asset classes and investment types and has published in high-ranking academic journals, making him the perfect person to speak to about the subject. We discuss the topic through the lens of several papers he has written on stocks, bonds, retirement savings, and return predictability. In our conversation, we unravel the nuance of the returns on long-term stocks and bonds, hear details about his research design, and learn how unanticipated events can affect the market. He also provides insight into the different biases surrounding long-term investments, the block bootstrap approach, reasons why the block bootstrap approach is needed, and why bonds and bills may not be the long-term investment you were hoping for. We also discuss the best options for investors regarding pre-tax and post-tax accounts and the differences between high-beta and low-beta portfolios. He also shares some basic steps for investors to help them protect their investments. Join us as we dig into the past to uncover the financial future with Professor Scott Cederburg.</p> <p> </p> <p><strong>Key Points From This Episode:</strong></p> <p> </p> <ul> <li>We begin with Professor Cederburg describing his research design for his work investigating long-term returns on stocks and bonds. <strong>(0:04:20)</strong></li> <li>Hear examples of how unanticipated events lead to impacts on stocks and bonds. <strong>(0:08:08)</strong></li> <li>What the overall trend in the data was from his research on stocks and bonds. <strong>(0:11:05)</strong></li> <li>Why considering different biase