From the desk of Willie Delwiche.
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 The behavioral response to this will be interesting to track and may put further pressure on outdated passive portfolio management approaches.