People forget how boring bonds are supposed to be.
Yes, rates ripped higher this year. Yes, long-duration got hit. But look at the actual damage:
2yr: +0.2%
3yr: -1.0%
5yr: -2.9%
7yr: -4.1%
10yr: -5.2%
20yr: -7.1%
30yr: -8.1%
Those losses? That's a bad *day* in stocks. Not even a particularly memorable one.
Yet bond investors are acting like the world ended. Meanwhile equity holders regularly stomach -3% days, shrug, and buy the dip.
This is why diversification works. Bonds aren't supposed to moon. They're supposed to not blow up your portfolio when everything else does. And even in a brutal rate environment, they mostly held the line.
If you panicked out of fixed income this year because of these numbers, you might want to revisit what bonds are actually for.
Yes, rates ripped higher this year. Yes, long-duration got hit. But look at the actual damage:
2yr: +0.2%
3yr: -1.0%
5yr: -2.9%
7yr: -4.1%
10yr: -5.2%
20yr: -7.1%
30yr: -8.1%
Those losses? That's a bad *day* in stocks. Not even a particularly memorable one.
Yet bond investors are acting like the world ended. Meanwhile equity holders regularly stomach -3% days, shrug, and buy the dip.
This is why diversification works. Bonds aren't supposed to moon. They're supposed to not blow up your portfolio when everything else does. And even in a brutal rate environment, they mostly held the line.
If you panicked out of fixed income this year because of these numbers, you might want to revisit what bonds are actually for.
