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Question
Why have bonds traditionally served as a useful counterweight to equities in a portfolio?
1
Bond income continues to be paid even when equity dividends are suspended
2
Bonds are less volatile than cash in most market conditions
3
Bonds and equities have historically been negatively correlated during recessions — central bank rate cuts push bond prices up at the same time equity prices fall, smoothing total portfolio returns
4
Bonds always produce positive returns regardless of economic conditions, offsetting equity losses
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