Perhaps there are two camps, those who think bonds have a different role in the current situation, and those who'd say "same as it ever was."cflannagan wrote: ↑Sun Nov 28, 2021 9:01 pm So with all the talks of "Financial repression", what do we think this means for bonds from a "flight to safety" role viewpoint?
As in some investors might not necessarily rely on bonds for returns (and in fact might be okay with slightly negative returns over long period of time), but are relying on bonds as a form of crash insurance.
I'm in the latter camp. I think bonds were always about accepting lower expected returns in exchange for protection.
My guess is that if the Fed keeps taking actions that tend to push asset prices up and interest rates down, then that's what we'll continue to get. And people will continue to accept meager interest rates, just like they're doing now.If we see another major crash like dotcom, housing, or COVID-19 crash.. how do we think bond funds would tend to react here, in times of "financial repression" that the govt is doing? Will this role become weaker, or will that role still be there? Will the positions in bond cushion the investor from downward movement (-50% becomes -30% or -20%) like they did before?