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> Bonds and stocks have been fairly non-correlated over recent years, but this hasn't always been so. It's great for modern portfolio theory (i.e., holding a po
by justinzollars 7y ago
> Bonds and stocks have been fairly non-correlated over recent years, but this hasn't always been so. It's great for modern portfolio theory (i.e., holding a portion of stocks and bonds and rebalancing periodically). There's no guarantee that it will stay this way.
This is true. This correlation has held for 30 years so we are conditioned into believing this is a sure trade - but it is not.
- ethbro 7y agoUltimately, correlation in free markets is just frequency of similar participant behavior, no? So if everyone is using robo advisor allocation, and the allocation algorithms all feature a similar bond shift, then that becomes the correlation?