The "safe" asset isn't always safe. From 1950 to 1981 — a long stretch of rising inflation and rising rates — long-term US government bonds lost more than half their value after adjusting for inflation, even though their stated (nominal) returns stayed positive the whole time.

The 1970s (into 1980) and the 1930s were opposite extremes for the dollar. Cumulative inflation from 1970 to 1980 ran about 98% — a dollar from 1970 was worth roughly 50 cents by 1980. The 1930s ran the other way: prices fell a cumulative 19%, deflation that made a 1930 dollar worth about $1.23 by 1939.

"Stocks always win in the long run" has a real exception on the books: from the spring of 1996 through March 2020 — 24 years — long-term US government bonds returned about 8.2% a year, edging out the S&P 500’s 8.0%, and did it with roughly a third less volatility.

Japanese stocks compounded at roughly 17% a year through the 1970s and nearly 29% a year through the 1980s — turning $10,000 in 1970 into about $610,000 by 1989. The bubble then burst so completely that the Nikkei 225 didn’t reclaim its December 1989 peak until February 2024, a 35-year round trip.