Aug 16, 2020
For years many have pointed to the end of the 60/40 Portfolio’s reign as a mass recommended asset allocation. But even in 2020, it still worked as bonds rallied and interest rates dropped to record low levels in the US. But with rates this low, do the risks now outweigh any potential benefits? How much more could bonds rally due to changes in interest rates given where they are? How negative could rates go?
What is 60/40 Stock Bond portfolio?
Is it realistic to think bonds will have same run as 1981-2020 going forward?
How negative can US Treasury yields go?
Nominal Returns vs Real Returns after inflation
Amount of negative yielding debt around the world
More interest rate risk while yields and cash flows are lower
Alternatives to the 60/40 Portfolio
Bill Gross said rates would have to go to negative -17% to equal last 40 year run in bonds
Mentioned in this Episode:
Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Podcast Myths around the 60/40 Portfolio https://brokenpiechart.libsyn.com/discussing-myths-around-the-classic-6040-portfolio-part-i
Contact Derek www.razorwealth.com