Recently, the 10-year U.S. Treasury note offered a yield of 2%. You can buy this note and then make $20 for every $1,000 invested.
Over the next 10 years, you'll make a grand total of $200.
Not bad and of course you will invest more than a 1,000.00 so this idea might even please you.
Investing in 10 yr treasuries will take 50 years of interest payments to earn your original investment back.
Ten years ago, stocks were expensive. The S&P 500 was at 1,200. and it was trading at about 19 times earnings.
At that valuation, it would take 19 years for an investor to make their money back.
Now, the stock market is trading at about 11-12 times earnings, give or take a wild daily swings or two..(maybe 10 times earnings is coming?? but who knows)It changes often, do the math yourself and you will see what I mean.
The point is that you will make your original investment back in about 11-12 years, or whatever your multiple gives you...
Or you can invest in treasuries at the current yield and can wait 50 years to make your original investment back.
American companies will continue to make products, and consumers will continue to buy them. Earnings will go up and down, but through out all of history, earnings have always increased over time.
As I see it, "Operation Twist" just made an environment that you must buy stocks in. In a world of 2% Treasury notes and 1% bank accounts, there is really no alternative for your money but stocks.
As the talking heads on the the "financial" networks preach gloom doom and doom. They will continue to parade out extreme bulls or extreme bears.
All in the service of getting as many people to listen to their commercial breaks as they can..
Meanwhile, this fiasco makes investors stick their heads in the sand.
What they wont say is that we all have a chance to pick up some of America's biggest companies and best multiples at bargain basement prices.