Suddenly, the 60/40 model has some life again. The Great Tumble or whatever we’re going to end up calling 2022 has put both stocks and bonds in a better starting position for future returns.
The good ol’ 60/40 portfolio, designed to produce decent returns in all environments, is having one of its worst years ever. Going by the simplest possible construction — 60% in the S&P 500 SPX, 40% in a 10-year Treasury — the -15.
3% performance is the third-worst showing since 1928, with only the Great Depression of 1931 and the subsequent 1937 crash producing worse results. And keep in mind, people were talking about 60/40 being dead even before this year, due to the paltry income generated on the fixed-income side.
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