Many financial assets made new highs in the first quarter. Gold and bonds did not. The drawdown they have experienced since their August highs has been remarkable - eclipsing 20% in the case of bonds, and approaching that level in the case of gold. In the Wall Street Journal’s list of Q1 winners and losers, long-term US bonds came in dead last (with a quarterly decline of 14%). For many conservative investors, this is their safe money and, especially for bonds, thought to be risk-free. The behavioral response to this will be interesting to track and may put further pressure on outdated passive portfolio management approaches.
