If you own long-term Treasuries, you'd be hard-pressed to find a worse investment than the S&P 500. But it is possible.
Seven S&P 500 stocks, including apparel maker V.F., financial Fidelity National and AT&T, lost more than half their value since March 9, 2020, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's significant as it means only a tiny minority of S&P 500 stocks did worse than the SPDR Portfolio Long Term Treasury ETF since its high.
Seeing it's so hard to find S&P 500 stocks that lagged long-term Treasuries underscores just how bad the implosion in one of the world's largest asset classes is. And it's a brutal reminder that Treasuries failed at their top job: protecting investors from stock-market volatility.
"Good news about the economy means corporate America is going to have to deal with higher interest rates for the rest of this year and probably most of 2024," said Edward Moya of Oanda.
Do You Need S&P 500 Stocks To Protect You From Bond Losses?
Talk about adding insult to injury. It's bad enough that investors in long-term Treasuries lost half their money in an asset designed for safety. But S&P 500 rallied at the same time.
While the SPDR Portfolio Long Term Treasury tanked 49.1% from its high, the SPDR S&P 500 ETF Trust rocketed 56.6%. And that's just the entire index. And it means you'd would have doubled your return had you owned the S&P 500 instead of long-term Treasuries.
In fact, picking S&P 500 stocks that were worse than the index itself would be difficult. All told, 98% of the stocks in the S&P 500 outperformed long-term Treasuries strictly on price. And with a little luck or skill, you could have done much better with stocks. While Treasuries were collapsing, nearly 100 S&P 500 stocks doubled in value and of those five shot up 500% or more.
How safe are those long-term bonds looking now?
Lagging Bonds Is Tough To Do
What kinds of S&P 500 stocks would you have had to buy to do worse than Treasuries?
Apparel maker V.F. is one of them. Shares of the maker of Calvin Klein clothing are down nearly 75% since March 2000. This fiscal year the company is expected to earn $2.02 a share, which is down nearly 22% from 2020.
But perhaps hitting closer to home is AT&T. AT&T is one of those stocks investors buy for safety. Its dividend yield is high (7.7% now) and its core business is relatively stable. And yet, shares of the telecommunications company is down more than 58% from the time long-term Treasuries peaked.
What's the lesson? Sometimes the riskiest move you can make in investing is playing it safe.
Worse Than Treasuries
S&P 500 stocks that underperformed since March 2000
| Company | Ticker | Ch. | Yield | Sector |
|---|---|---|---|---|
| V.F. | -74.0% | 11.14% | Consumer Discretionary | |
| Fidelity National Information Services | -58.9 | 3.89 | Financials | |
| AT&T | -58.3 | 7.68 | Communication Services | |
| Boston Properties | -56.7 | 7.36 | Real Estate | |
| Warner Bros. Discovery | -56.5 | 0.00 | Communication Services | |
| Walgreens Boots Alliance | -55.0 | 8.80 | Consumer Staples | |
| Baxter International | -53.3 | 3.17 | Health Care | |
| SPDR Portfolio Long Term Treasury* | -49.1 | 3.62 | Financials |
