Benchmark 10-year Treasuries have yielded less than zero on an inflation-adjusted basis at the end of every month since November as concern Europe's debt crisis would derail the global economic recovery pushed investors to the safety of government debt. U.S. bonds returned 9.61 percent since Dec. 31, 2010, according to Bank of America Merrill Lynch indexes. The S&P 500 added 12 percent, including dividends.

With bonds so expensive, prospects for stock returns are "as good as they have been in a generation," Oppenheimer, Goldman Sachs's London-based chief global equity strategist, wrote in a March 21 report. Share prices are too low given the economic outlook, he said. Oppenheimer recommends shares of global energy companies, Japanese industrial stocks, and U.S. technology corporations, according to an April 10 note.

Fed Model

Equities are close to the cheapest level ever relative to debt even after the S&P 500's biggest first-quarter rally since 1998, according to the so-called Fed model, which compares the earnings yield for stocks with Treasury rates.

Profit for S&P 500 companies have represented 7.16 percent of the index's price on average in 2012, or 5.13 percentage points more than yields on 10-year Treasuries, according to Fed model data compiled by Bloomberg. That compares with the average difference of 0.03 percentage points and the record high of 6.99 points when the bull market started in March 2009, according to data compiled by Bloomberg going back to 1962.

"This is a very attractive time for equities, especially relative to bonds," Abby Joseph Cohen, the senior U.S. investment strategist at Goldman Sachs, said in a telephone interview on April 13. After three decades of declines, "it's hard to see how interest rates are going to go down much more and stay there for a long period of time," she said.

Increasing Dividends

Cohen said she likes stocks with increasing dividends in groups such as technology. David Kostin, the firm's chief U.S. equity strategist, recommends energy and technology companies.

Warren Buffett, the chairman of Berkshire Hathaway Inc. and the third-richest person in the Bloomberg Billionaires Index, said in February that low interest rates and inflation have made bonds "among the most dangerous of assets."

The last time real yields were negative was from 1979 to 1980 when Fed Chairman Paul Volcker fought runaway inflation by raising borrowing costs. The same acceleration in consumer prices that Volcker targeted also pushed 10-year Treasury yields below the so-called core inflation rate at the end of 1970 and during 1974 to 1975. American consumer prices excluding food and energy rose 13.3 percent in May 1980, 310 basis points, or 3.1 percentage points, more than bonds.