How risky can bonds be? They have only declined in three of the last 23 years, as measured by the Barclays U.S. Aggregate Bond Index and shown in Chart 1. Negative performance less than 13% of the time doesn’t seem very risky. Only two of those years, 1994 and 2013, posted returns lower than -2%, and all three negative years were followed by excellent returns. Hardly any risk there.

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