Finance Question

>>2675624
Good question.

If you have the answer, you have just solved the equity premium puzzle, the most vexing question of economics/finance of the last 30 years.

Tell me first so I can claim your nobel prize, thanks

>>2675624
Safety. treasury bonds are guaranteed by the American government. Companies can go B/K and you can lose your investment, thats why ETFs are becoming real popular atm. More reward for less risk.

>>2675635
so why wouldnt everyone have just bought an index fund in the 1980s instead of 30 year govt bonds? they existed back then.

>>2675629

File: DJIA.jpg (60KB, 860x586px) Image search: [Google]

60KB, 860x586px

>>2675648
Because for the last 17 years the stock market was going down due to the Cold War. People didnt like seeing their money dissappear day by day.

>>2675629
what drives the difference between short term and long term yields?

>>2675635

>guaranteed by the American government.

holy shit that makes me feel so safe

>>2675852

They're guaranteed by Donald Trump personally. If anything goes wrong, he'll underwrite the debt with memes.

>>2675783

Market certainty drives short and long term yields.

Since the short term has a higher accuracy of predictability, the yields are typically lower. But it's a crapshoot as to what the economy will look like 10, 20 or 30 years from now, so the yields are higher (to account for the risk one is taking).

>>2675860
remember during the campaign when he said he was going to "renegotiate" the national debt, and when people asked him if he was really suggesting that America was going to default on its loans he basically said oh uh I guess not