Investors are shocked that the so-called 60/40 portfolio failed to provide protection from the bear market in stocks this year. Many thought stock and bond prices always move in opposite directions, which was the foundation of their diversification strategy.
Constructing portfolios with less downside capture is critical to building long-term wealth, says this advisor and former NAPFA chair.
Just slightly over one year ago, inflation was not a concern; since then, it has spiked enormously and reached levels not seen since the late 1970s and early 1980s. Right now (late April 2022), inflation is over 8%, as measured by the consumer price index, and the latest producer price index[1] increased at an annual rate that exceeds 10%. Building a balanced portfolio means combining different asset classes that can respond positively to other economic conditions. Having Natural Resources and Real Estate is essential since they can provide some protection against inflation.
Many investors still think they can successfully time the market, selling before a decline and buying on the recovery. Some are lucky enough to do it successfully a couple of times, believing it was skill, not luck. Here we explain why it is do difficult to do successfully
Most individual investors’ portfolios include only two asset classes: public domestic equities and bonds, the “risky” and “safe” asset classes, respectively. This traditional portfolio (colloquially referred to as the “60 / 40” reflecting a typical allocation to equities and bonds) did not perform well from 2000 – 2010 but did well over the most recent ten years from 2011 – 2021.Â
Our process at Atlas is different from most firms in the video accompanying this blog we were asked some specific questions about our process.