How can the volatility of risk aversion be managed?

Since 2010, there has been a constant alternation between periods of high risk aversion and periods of low risk aversion. The shocks that have driven up risk aversion have been either political (political crisis in Italy, political risk in France), economic (loss of growth, Trump’s tariffs in the second half of 2018) or accidental (coronavirus in the first half of 2020). This rapid alternation between periods of high and low risk aversion has led to high variability in risk-free long-term bond interest rates and in share prices, with a positive correlation between both variables. To guard against the volatility of risk aversion, investors should therefore diversify their portfolios between risk-free bonds and equities .