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Season 4 · When prices fall · 4.6

When people get scared, they buy this

Fear risesMoney moves to safe havens
What it is

A safe haven is something investors rush to when they're scared: gold, very safe government bonds, or a small group of stable currencies.

Stocks fallwhilesafe havensoften hold or rise
Why it matters

Safe havens often move the opposite way to risky assets during a scare, which is why some people hold a little as a cushion against bad days elsewhere.

STOCKS, A BAD MONTH−15%GOLD, SAME MONTH+3%
The numbers

In a sharp stock market fall, gold or safe government bonds have sometimes held steady or even risen, cushioning a portfolio that held a small share of them.

A cushionNot a growth engine
The trap

Safe havens do not always behave the same way in every crisis, and they usually grow slower than stocks over the long run. They are a cushion, not a growth engine.

Your worst monthWhat held steady?
Where you see it

Check how your own portfolio actually moved in its worst month: did anything in it hold steady while the rest fell?

Try it
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