[thrill]

Picking the previous decade in a market that has mostly simply gone up is hardly cherry picking. The problem with choosing simple funds such as the plaintiff's example of the Vanguard S&P 500 Index Fund is that selection of such leaves little room to offer political benefits to "being on the endowment committee". The rebuttal by the current endowment board that they have too much money to risk it in one asset class is trivially overcome by a grossly simple percentage of bond allocation - but such simple investment approaches don't keep dozens of active managers engaged.

[birken]

It isn't possible for bond markets to collapse at the same time as stocks?

[smabie]

It happened during Coronavirus, but historically bonds have been counter cyclical. Some are worried that the paradigm has changed, and that bonds are no longer uncorrelated.

If this is true, it has large and significant ramifications on optimal portfolio construction.

[cinquemb]

> Some are worried that the paradigm has changed, and that bonds are no longer uncorrelated."

I argue that this is what has changed:

"Treasuries have also benefitted from the wider adoption of non-cash collateral since the crisis. Just over $1.8 trillion in cash was posted as collateral against loans and other transactions in 2008, with $1.3 trillion coming in the form of securities and other instruments, according to data provider IHS Markit. A decade later, those positions have inverted, with non-cash collateral balances standing at $1.6 trillion, compared with $870 billion for cash."[0]

and

“If an institution wishes to use [Treasury] assets for financing, to gain yield through lending them out or to meet their HQLA requirements, putting the securities into triparty is the most efficient way to achieve those goals”[0]

Since treasuries (and bonds in general through collateral transformation, emphisis on "non-cash collateral" above meaning not just treasuries) are being used to finance more risk asset purchases.

[0] https://www.bnymellon.com/us/en/what-we-do/markets/aerial-vi...

[throw0101a]

> It happened during Coronavirus

I don't know about that:

> The Nasdaq 100 ETF (QQQ) is up an astonishing 25.5% this year during a pandemic and that’s including a 29% peak-to-trough drawdown. But the long-term treasury ETF (TLT) is up 27.3%.

* https://awealthofcommonsense.com/2020/08/why-would-anyone-ow...

Though the article goes on to say the primary reason for owns bonds are:

* Bonds hedge stock market volatility.

* Bonds can be used to rebalance.

* Bonds can be used for spending purposes.

* Bonds protect against deflation.

See also his 2018 Q4 article (when the S&P 500 was in the middle of its 20% correction):

* https://awealthofcommonsense.com/2018/10/the-case-for-bonds/