The Informed Investor

The Death of the 60/40 Portfolio? | The Informed Investor 30

15 snips
Jan 30, 2026
They debate whether a 60/40 stocks-and-bonds mix still makes sense after unusual market years. Origins and flexibility of the 60/40 concept are explored. They explain how bonds reduce volatility and the multiple roles fixed income can play. Listeners are warned about replacing simplicity with complex, costly alternatives. Historical data and practical allocation takeaways are discussed.
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INSIGHT

Origins Of The 60/40 Allocation

  • The 60/40 allocation originated from mean-variance optimization aiming to maximize return per unit of volatility.
  • Wes Crill notes this result is noisy, depends on objectives, and doesn't imply a single optimal mix for all investors.
INSIGHT

Small Fixed Income Cuts Volatility Big

  • Adding a modest fixed-income allocation sharply reduces portfolio volatility while sacrificing little long-term return.
  • Wes Crill cites a global mix where returns go from 9.9% (100% equity) to 8.6% (60/40) while worst calendar-year drawdown halves.
ANECDOTE

2022 Was A Unique Down Year For Stocks And Bonds

  • Mark Gochnour labels 2022 an outlier where both US stocks (Russell 3000) and US bonds (Bloomberg US Agg) fell in the same year.
  • He reports five negative bond years in 47 years and only once (2022) did bonds and stocks both decline.
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