The Test Bench › famous_system
Does The Flight to Long Bonds (TLT) actually work?
MYTHA famous idea that does not survive an honest test.
The claim
When stocks fall, move to long Treasury bonds for safety — Conventional 'risk-off' wisdom
What we did
Tested against Buy & hold SPY / honest reconstruction.
The result
Result: Switching to long bonds on the warning made drawdown WORSE: -34% -> -43% (2011-26)
Switching to long bonds on the warning made drawdown WORSE: -34% -> -43% (2011-26)
Verdict
The reflex everyone preaches -- flee to long bonds when stocks drop -- FAILED the test. In 2022 bonds fell WITH stocks (rate shock), so switching to TLT on a stress warning DEEPENED the drawdown instead of cushioning it. Cash (-14%) and gold (-23%) protected; long bonds didn't.
What the test did and did not do
- net of real costs
- tested out of sample
- point-in-time data
- checked for look-ahead
Almost nobody publishing a backtest says which of these they did. We list the ones we failed as well as the ones we passed.
Tested 2026-06-23. The same treatment, applied to every other system, is on the test bench.
Written with AI assistance from our own test database. The numbers are computed, not composed.
General market commentary for education, not personalised investment advice. Backtested results are hypothetical. Trading carries a real risk of loss.