This is a follow up to another post I made a few days ago. I define a lost decade as an 8-12 year period where bonds outperformed stocks at some point in that long-term window. This is an important distinction that breaks from convention of defining a lost decade as having negative absolute returns. I don't think that the risk of owning stocks is negative returns - though that certainly can happen - but rather that we're bearing excess risk without being compensated for it. This image shows the rate of lost decades against yield spreads1. We see that decreasing yield spreads are associated with an increasing likelihood of experience a lost decade. The very left bin contains only years from 1996 to 2000...and today. Conversely, points in time like March of 2009 and the bottom of Covid in 2020 were pretty well inside the X > 1.0 bin. Naturally this isn't a timing metric, but it does seem to allow us to distinguish between "fat pitch" opportunities or otherwise.…