A stock like loss from a supposedly safe investment

Bonds are supposed to be safe and stable and should not lose a lot even if in a down year. But this time it is different! We are just witnessing a brutal year of the bear market for bonds. Even worse, the loss has been in the magnitude comparable to the stock loses. It is the worst seen in the bond history. See below the data my friend shared with me. 

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Here's a table from Charlie Bilello showing the annual performance of the 10-year Treasury, which, like the 30-year, has never experienced anything like the current decline:

Not surprisingly, the classic, conservative 60/40 strategy has failed recently – as this Wall Street Journal article notes: The Trusted 60-40 Investing Strategy Just Had Its Worst Year in Generations. Excerpt:

For generations, financial advisers touted the 60-40 strategy as the single best way for ordinary people to invest. The idea is simple: owning stocks in good times helps grow your wealth. When stocks have a bad year, bonds typically perform better, cushioning the blow.

Not anymore.

Some analysts say the crux of the portfolio's success – bonds' tendency to rise when stocks fall – generally happens when inflation and interest rates are relatively low. They argue that expectations for a prolonged period of higher rates and lingering inflation will weigh on both stocks and bonds, fostering a market environment that looks much different than in recent decades.

Wall Street's biggest asset managers now focus on the pitfalls of what volatile markets can do to an unprepared portfolio in their marketing materials. Financial advisers are fielding an onslaught of calls from their clients to dump stocks and pile into cash – while some advisers are recommending assets not typically sold to individuals like commodities and private asset markets.

The tried-and-true 60-40 portfolio lost 17% last year, its worst performance since at least 1937, according to Leuthold Group analysis. Even with a 14% gain in the S&P 500 helping the strategy recover in 2023, stocks and bonds have moved in tandem, more over the past three years than any time since 1997, Standpoint Asset Management analysis shows.