For generations, financial advisers touted the 60-40 strategy as the single best way for ordinary people to invest.
- The idea is simple: owning stocks in good times helps grow your wealth. When stocks have a bad year, bonds typically perform better, cushioning the blow.
Not anymore: Some analysts say the crux of the portfolio’s success—bonds’ tendency to rise when stocks fall—generally happens when inflation and interest rates are relatively low.
- They argue that expectations for a prolonged period of higher rates and lingering inflation will weigh on both stocks and bonds, fostering a market environment that looks much different than in recent decades.