This century is barely 20% complete, yet investors have suffered through three extreme bear markets. Let’s look at which asset classes provided the much-sought diversification to offset losses in U.S. equities.

It hasn’t been a stellar century for stocks. In fact, through the first quarter of this year, bonds performed as well as U.S. stocks and trounced international stocks. These are measured as the total return (including dividend reinvestments) of the Vanguard Total U.S. Stock Index, International Stock Index, and Bond index.

That’s because of the three bear markets we’ve so far experienced. We began with the dot-com tech bubble, when the “new age” economy meant that cash flow no longer mattered. It was simple to do an IPO with virtually no revenue or hope for profit and still get multi-billion-dollar valuations. Next was the real-estate/financial bubble, when we banked on the fact that real estate could never go down in value. That presumption allowed agencies to assign AAA ratings to complex mortgage derivatives backed by borrowers who had no prayer of meeting their obligations. Fast forward 11 years and the longest bull market in history, and the COVID crash that changed all of our lives.

Among the three bears, the COVID crash has, so far, been the mildest, down 34.8% followed by a very rapid recovery after the bottom on March 23. But we don’t know if this crash is over. Markets remain as volatile as the data on the coronavirus itself. Though the dot-com bubble wiped out 48.6% of the U.S. stock market value, first place (so far) goes to the real estate bubble that wiped out 55.2% of the U.S. stock market value.