When Both Stocks and Bonds Tank: What 86 Years of Market History Reveals

2022 was brutal for a reason most investors never expected. The S&P 500 dropped 18.1%—painful but not historically catastrophic. The real shock? Treasury bonds got crushed too.

The 10-year Treasury plummeted 17.8%, marking its worst year ever recorded. The 30-year bond lost 39.2%—the worst performance since data collection began in 1754. So much for the “safe haven” narrative.

This created a perfect storm for balanced portfolios. The classic 60/40 allocation (60% stocks, 40% bonds) nosedived 18%—the worst performance since 1937. In normal recessions, when stocks fall, bonds rally to cushion the blow. 2008 proved this: stocks down 37%, bonds up 20.1%, portfolio down just 14.2%. Not in 2022.

The Silver Lining

Here’s where history gets interesting. Since 1928, only four other years saw both stocks and bonds decline simultaneously: 1931, 1941, 1969, and 2018. What happened next?

The S&P 500 rebounded positive in three of four following years (only exception: 1932, height of Great Depression). Treasury bonds turned positive in all four cases.

The caveat? Four data points is tiny. And 2022 was the first time both fell double digits, making historical comparisons sketchy.

Could This Be 1974 or 2002?

2022 mirrors both periods: tech crash like 2000, oil spike from geopolitics like 1973. Back-to-back market losses happened only twice post-WWII (or thrice if you count 2000-2002 tech spiral).

But inflation’s cooling now, job market’s holding steady, oil prices retreated. Unless a new shock hits, 2023 could deliver recovery.

Bottom line: Even investing in 1972 before the brutal 1973-74 crash yielded 9.4% annualized returns over 50 years. Time in market beats timing the market—always has.