Apr 2003
Bonds are usually less volatile than stocks and, therefore, some would say they are less risky. (If the risk in question is that of earning an inadequate return, however, one could make the point that bonds may be more risky than stocks.) Since investment return is, in part, the compensation that investors receive for shouldering volatility risk, it stands to reason that over the long run, bonds (being less volatile) should underperform stocks (which are more volatile).