""The historical evidence reveals a striking pattern: government bonds have repeatedly generated substantial real losses during these extreme episodes. They have even underperformed equities and real estates which are traditionally regarded as risky assets.""
""Whenever there is a major war, we observe a sharp decline in the bond performance - wars are always disaster times for bondholders. Similarly, the bondholders also suffered large losses during the 'war on Covid-19.'""
Government bonds, particularly Treasuries, are traditionally viewed as safe investments. However, historical analysis shows that during wars and pandemics, bondholders often face significant real losses. The Center for Economic Policy Research found that bondholders experienced average real losses of about 14% during the first four years of conflicts. Additionally, cumulative bond returns lagged over 20% behind stocks and real estate. Increased government spending and inflation during these crises contribute to the poor performance of bonds, making them less reliable during extreme economic conditions.
Read at Fortune
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