The answer lies in the perception, persistent through much of this century, that stocks are much more risky than bonds. After all, if stocks, held for the long term, produce higher returns with no greater risk, there shouldn't be a risk premium at all. Each time the market has recovered smartly and soared to new highs. There has not been such a protracted bull market for a quarter century. Glassman and Hassett believe a fortuitous set of events has created our current investment atmosphere.
Estimates now are that half the nation's adult population owns stock.
The Cold War is over, and market economies practicing free trade are spreading. The budget deficit, once regarded as a mortal threat to the U.S. economy, is gone. By the calculations of Glassman and Hassett, stock prices will reach parity with bond prices only after tripling beyond current levels, which would lift the Dow Jones Average to 36,000. Once this occurs, they predict, the growth of stock prices will level off, and stocks and bonds with comparable returns will remain comparably priced. Glassman and Hassett believe this will happen relatively soon, but they don't pretend to know exactly how long it will take.