CONCLUSION
No one denies that in the short run stocks are riskier than fixed-income
assets. But in the long run, history has shown that stocks are actually less
risky investments than bonds. The inflation uncertainty that is inherent
in the paper money standard that the United States and the rest of the
world have adopted indicates that “fixed income” does not mean “fixed
purchasing power.” Despite the dramatic gains in price stability seen
over the past decade, there is still much uncertainty about what a dollar
will be worth two or three decades from now. Historical evidence indi-
cates that we can be more certain of the purchasing power of a diversi-
fied portfolio of common stocks 30 years in the future than the principal
on a 30-year U.S. government bond.
36 PART 1 The Verdict of History