From what I understand, you tend to think that when stocks go down, bonds go up and vice-versa.
That may be, or not, depending on where interest rates are standing.
Bonds return essentially come from three sources:
- coupon paid
- interest rates movements (when rates go up, bond goes down and when rates go down, bonds go up)
- if held to maturity, the difference between the price paid and the reimbursed principal (example: you buy a bond for 80 and at maturity, it reimburse a principal of 100)
If tomorrow there is a crisis, i know only one thing: rates don’t have that much margin to go much lower, so in the best case they will stay the same. Unless the next crisis is a credit crisis and in that case, well, too bad for bonds.
The decorrelation between bonds and stocks might very well prove to be a myth. it’s not because it worked in 2008 (when rates were much higher) that it will work again.
By the way, what kind of bonds? Corporate? Government?