Key points
- Shares and government bonds usually moved in opposite directions from 2000 to 2021; in 2022 both fell together.
- In a sell-off, riskier assets (shares, high-yield bonds, emerging markets) tend to fall together.
- Forced selling by leveraged investors can push unrelated assets down at the same time.
Example
A 60/40 portfolio cushions a fall in shares only if bonds rise or hold steady. If both fall, the portfolio loses more than its owner expected.
In history
In mid-March 2020, in a scramble for cash, even Treasuries and gold were briefly sold alongside shares. In 2022, rising inflation pushed shares and bonds down together for the whole year.
Related terms