It will be all about stocks in the coming years, says Jim Paulsen, Chief Investment Strategist of Wells Capital Management. He believes that bonds are fairly overpriced and have some tough times ahead of them.

Paulsen analyzed the capital-labor ratio, the ratio of the quantity of capital to the quantity of labor, since the post-war era and found that when the ratio rises, so do stocks. When it stops rising, bonds are able to hold their own.

The ratio, he says, rose after World War II into the 1970s and then briefly during the dot-com boom in the late 90s. “What I’ve noticed just recently is the capital-labor ratio after 15 years of being flat since the dot-com top is starting to go up again,” he says. The U.S. is preparing for another capital-spending cycle without the labor force growing, and therefore a rise in productivity, a good sign for stocks and a not-so-good sign for bonds.

Companies are certainly sitting on hoards of capital. Google (GOOGL) currently has $64.4 billion in cash and short-term investments. Apple (AAPL) has $160 billion in available cash (that’s about twice as much as the U.S. government) and Microsoft (MSFT) has around $85 billion. But Paulsen says he’s seeing M&A activity pick up.

According to a BDO survey, 16% of retail CFOs say M&A activity is the growth tactic they’re most focused on for 2015. M&A activity in the telecom industry grew by 46% in 2014 and is expected to continue into this year. “[This is the year where the] economy becomes lead by business spending,” says Paulsen.

As for which stocks to invest in, Paulsen warns to stay away from the energy sector, but also says that he isn’t sure stocks will do particularly well in the coming years. He only knows that they will beat bonds.