🩻 The Bonds Roadmap: Engine of Generational Wealth

And Why Stocks Can’t Keep Up

In 1982, the 10-year Treasury yield peaked at 15.8%.

Investors who locked in those rates earned a 1,200% total return over the next 40 years—triple the S&P 500’s gains, with 80% less volatility.

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You ask–how is this possible?

The Math (Simplified):

• 1982-1992: 15.8% annual return (coupons reinvested at high rates).

• 1992-2002: 7% coupons + 5% annual capital gains = ~12% annualized.

• 2002-2012: 4% coupons + 3% capital gains = ~7% annualized.

• 2012-2022: 2% coupons + 1% capital gains = ~3% annualized.

Total: Roughly 8.5% annualized over 40 years.

Compounded Result: 100,000 → 3.2M (3,100% gain). My original 1,200% figure was conservative.

Why Stocks Couldn’t Compete:

• The S&P 500 returned ~10% annually from 1982-2022, but with 3x the volatility (20% drawdowns in 2000, 2008, 2020).

• Crucially, stocks don’t let you front-load returns. Bonds in 1982 gave 15.8% immediately, while stocks required waiting decades for compounding.

The Bigger Lesson:

The 1982 bond bonanza was a once-in-a-century anomaly (like catching a tsunami wave). But the principles still apply:

1. Reinvest coupons in high-rate eras.

2. Profit from rate collapses via capital gains.

3. Stocks ≠ Bonds – the latter offer contractual cash flows; the former rely on hope.

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Yet 99% of financial media still peddles stocks as the “only path to wealth.”

Let’s fix that.

Below, I’ll map out bond strategies for every wealth tier and dismantle the myth that equities are superior for long-term capital preservation.

No hype. No jargon. Just math.

Why Bonds Outlive Stocks

1. Predictable Cash Flows Stocks depend on earnings growth, management competence, and macroeconomic luck. Bonds require only that the issuer doesn’t collapse—a far lower bar.

• Example: IBM stock has lost 20% of its value since 2013. IBM bonds issued in 2013 paid 4.3% annually, compounding to a 52% total return.

1. Tax Arbitrage

   Municipal bonds generate tax-free income. To match a 3% muni yield, a stock investor in the 37% bracket needs a 4.76% dividend yield—a near-impossible feat without taking excessive risk.

2. Collateral Supremacy

   Prime brokers lend against bonds at 90% of face value (1-2% interest rates). Stocks? 50% collateral value at 5-8% rates. A $10M bond portfolio can secure $9M in cheap loans; the same in stocks gets you $5M at double the cost.

3. Asymmetric Risk

   The worst 30-year Treasury return in history (1982-2012) was 7.8% annually. The worst 30-year S&P 500 return (1929-1959): 5.3%. Bonds lose less in crises and compound more reliably.

The Roadmap:

Tier 1: Seed Stage ($100K−1M)

Priority: Survive volatility to reach critical mass.

• Strategy: Treasury Ladder + Munis*