EricOnEquities<p>During <a href="https://mastodon.social/tags/recessions" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>recessions</span></a>, <a href="https://mastodon.social/tags/stocks" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>stocks</span></a> often decline while <a href="https://mastodon.social/tags/bonds" class="mention hashtag" rel="nofollow noopener" target="_blank">#<span>bonds</span></a> rise, providing diversification benefits.</p><p>While true, there are exceptions, such as the early '80s when both stocks and bonds gained or early 2022 when stocks and bonds got obliterated.</p><p>The current economic environment, with higher inflation and interest rates, has led to increased stock-bond correlations, impacting portfolio diversification strategies.</p><p>Below is a plot of a typical 60/40 portfolio using VTI/BND as proxies:</p>