Year by year and product by product, the investment setting has been taking on the aspects of a Lewis Carroll landscape. Things haven't been what they have seemed since 1966, when the stock market topped out at its all-time high (based on inflation-factored dollars -- the most revealing way of looking at it). Prior to 1966, equities were safe harbors of idle money, protecting it against the dry rot of inflation. If stocks rose when money-demand heated up, bonds went the other way. To be in stocks back then meant not to be in bonds.
But all this has changed, primarily under the influence of double-digit interest that has never before been experienced in this country. Recently, bonds and stocks have been rising and falling in tandem, their respective well-beings newly symbiotic. What a healthy economy needs now, Wall Street assumes contradictorily, is for business to slow down; then stocks will be worth buying. In other words, it is wise to buy shares of a business only if that business isn't growing too fast or is about to suffer a quarterly earnings decline. The straight-and-narrow that must be toed is toward utter dullness.
The current market shows a concern for this insidious trend toward business as unusual. The lackluster performance of stocks is apt to continue until it again makes sense for commerce to perform efficiently. Until then, investors likely will have to be content with holding their zero-coupon bonds to maturity. At 13% per year, it is a lot safer than maintaining stock holdings against the risk of renewed inflation.