Is the classic 60/40 portfolio coming back to profit?
Summary
Do you remember the 60/40 portfolio?
The revenge of the 60/40 portfolio is coming on!
Conclusions
Conclusions
Do you remember the 60/40 portfolio?
I hope that you remember my post about the classic 60/40 portfolio: What is a financial portfolio?
The classic 60/40 financial portfolio was designed by John Clifton Bogle many years ago.
The composition of the 60/40 portfolio is based on the simple division between stocks (60%) and bonds (40%).
Author's elaboration – Source: Google Sheets.
If you remember my post about How to set up a portfolio in Google Finance, you know that this (2022) was a negative year for every kind of financial portfolio.
But, if we look at the future, the perspective could change.
The revenge of the 60/40 portfolio is coming on!
J.P. Morgan Asset Management has just published a document called "2023 Long-Term Capital Market Assumptions" (27th annual edition - 124 pages).
You don't need to download and read all these pages! Furthermore, it's written, "FOR INSTITUTIONAL/WHOLESALE/PROFESSIONAL CLIENTS AND QUALIFIED INVESTORS ONLY".
You can simply read the "Executive Summary" reported on the same web page of the link for the download of the document.
Here we can read that "Once again, 60/40 can form the bedrock of portfolios, ..." and "Our forecast annual return for a USD 60/40 stock-bond portfolio over the next 10–15 years leaps from 4.30% last year to 7.20%".
Remember: this is only an opinion. Nobody knows the future! But is an opinion based on serious financial research and I think that it must be taken into consideration.
Conclusions
- No one has a crystal ball with which to read the future, especially about financial markets, but it's not stupid to take into consideration serious financial research made by serious management and the long and positive past performance of a classic portfolio, too, like the 60/40.
- Remember, also, that the perspective of a financial portfolio is the long period; a single negative year is not so relevant for global performance.
So, let's see what will happen next year, always maintaining a cautious attitude.
A
sincere wish of good work to all!
Written by F. GRAMOLA (*).
(*) Member of S.I.A.T., the Italian Society of Technical Analysis (member society of I.F.T.A. – International Federation of Technical Analysts).
Warning
We merely cite our personal opinions for educational purposes only.
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Initial photo by Adeolu Eletu on Unsplash.
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