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Bonds Becoming A Texas Hedge For Stocks

Courtesy of ZeroHedge View original post here.

By Simon White, Bloomberg Markets Live commentator and reporter

This makes life difficult for holders of portfolios with stocks hedged with bonds. That was certainly the case in the high-inflation 1970s. While a portfolio of 60/40 stocks and bonds apparently did well, nominal variables become misleading in high-inflation periods and everything needs to be viewed in real terms. A 60/40 portfolio made almost 50% in the 1970s in nominal terms, but in real terms it actually lost almost 30%!


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