Episode #149: No, the 60/40 Portfolio Is Not Dead

Recently we’ve seen quite a few headlines that suggest that the concept of the 60/40 portfolio has run its course. However, a fair amount of pushback is caused by people adopting this concept for the wrong reasons. In this episode, Grant dives into the unique benefits of the 60/40 portfolio that made it so popular, why this concept is still valid, and how to properly use this portfolio concept in today’s economic conditions.

Show Notes

[01:40] The 60/40 Rule – Grant explains the idea behind the 60/40 rule, how it became extremely popular among investors over the last few decades, and why some people have started to question its relevance.

[04:00] Economic Trends – Grant dives into some of the economic trends related to inflation and deflation that caused a lot of speculation recently and their impact on businesses and investments.

[10:59] Diversification Benefits – Grant discusses the benefits of having both stocks and bonds in a portfolio and how it improves the risk-adjusted return over a long period.

[14:50] Tough Economic Conditions – Grant explains how the mortgage crisis affected people’s confidence around the diversification benefits of having stocks and bonds and how a combination of stocks and bonds can help your portfolio survive a period of tough economic conditions.

[23:20] The Bonds are Your War Chest – Grant dives into how to take advantage of bonds to improve your portfolio while stocks are underperforming.

Resources

Time, Not Timing, is What Matters:
capitalgroup.com/individual/planning/investing-fundamentals/time-not-timing-is-what-matters.html

Should You Sell Your Stocks When The Market Tanks? The Myth Of Missing The Best 10 Days:
forbes.com/sites/raulelizalde/2022/05/05/should-you-sell-your-stocks-when-the-market-tanks-the-myth-of-missing-the-best-10-days/?sh=2c7b090273ed