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This is a "recent" phenomenon. If you look back to 1900, bonds have a lower return on average, but in stock drawdowns they maintain a positive performance. Around 2000, they became correlated. Coi...
Answer
#1: Initial revision
by
matthewsnyderâ€
·
2024-06-26T14:31:01Z (5 months ago)
This is a "recent" phenomenon. If you look back to 1900, bonds have a lower return on average, but in stock drawdowns they maintain a positive performance. Around 2000, they became correlated. Coincidentally, the question was prompted by looking at the past 20 years of data. I saw some literature claiming that this is due to new monetary policy - low interest rates have caused bonds to track stocks, perhaps due to the practice of using cheap debt to inflate stock price with buybacks. I can't seem to find it now, so make of that what you will. If someone has a source for this, I would appreciate an edit/comment.