I'm a 36yo novice investor (just paddling around with VOO/VXUS for the time being), and I'm very confused by the apparent relationship between the stock market and the bond market which everybody else seems to understand. What is it about Treasury interest rates going up that would cause the stock market to drop? Perhaps I'm just being dumb (happens all the time), but I can't understand why a rising interest rate would evaporate a bunch of value when so many financial institutions are invested in keeping the market healthy.
Also, I've repeatedly been told that the S&P 500 tends to outperform other bits of the market over time, so I guess I'm wondering: do bonds become a better buy than VOO-type stocks when interest rates hit some kind of inflection point? I'm not planning to sell my ETF holdings, but should I be diverting a percentage of the money I'm investing to buy some kind of bonds?
Thanks a million for any advice!