Treasury yields above 5%: is the stock market still worth the risk?

Long-term U.S. Treasuries now yield around 5% guaranteed at maturity, and an r/investing thread is wrestling with whether equity returns that are neither guaranteed nor predictable still justify the risk for long-term investors who are rebalancing today.

The top comment captures what many equity holders are thinking: the Nasdaq 100 fund is up 25% over the last 12 months, which makes 5% look like a consolation prize, but that anchors on trailing returns just as the equity risk premium shrinks.

One commenter notes that 5% is a nominal yield and that revenues of most decent companies grow at least as much as inflation, while bond payments do not. Another says it would take a Treasury near 8% to shift the calculus, and that at 5% equities still win over a long horizon.

Age and risk tolerance keep surfacing as the practical dividing line, with bonds favored near retirement and growth favored by younger investors. One commenter points out that the index's headline performance is concentrated in AI and hyperscaler names making up roughly 45% of the index, a concentration risk that bonds sidestep entirely.

For anyone rebalancing right now, the question is whether trailing equity returns are a reliable guide when dividends are compressing at the same time risk-free rates are rising.