Article: 60/40 portfolio in 20% decline

[steelyman]

This article, posted on CNBC, was interesting to me as I’m slowly working my way toward a 60/40 split in my retirement portfolio:

The traditional balanced portfolio of 60% stocks and 40% bonds lost 20% from its peak value.

This is only the fourth time in 75 years it has suffered such a decline with the other moments coming in August 1974, September 2002 and January 2009, according to Michael Batnick of Ritholtz Wealth Management.

An investor who rebalanced holdings back to the 60/40 asset split at the end of the month when a 20% decline was first registered would have been positioned for attractive returns in subsequent years.

But some believe there are reasons to be skeptical that holding fast to the 60/40 stance this time will fare as well as in past decades.

https://www.cnbc.com/2020/03/28/the...loses-20percent-for-only-the-fourth-time.html

 

[atmsmshr]

Another approach besides the 60/40 standard split was cited by Michael Kitces and Wade Pfau known as the rising equity glide path.

The rising equity glide path would do better to guard against the Sequence of Return Risk for early retirees. However, when the bulls are running it will leave a smaller portfolio.

Risk Reward balance.

 

[COcheesehead]

I was using the rising equity glide path prior to the down draft and my losses were less than 7%. I have since started into the rising equity phase of the equation. There was also a small window to pick up bonds with some fantastic yields.

 

[USGrant1962]

Another approach besides the 60/40 standard split was cited by Michael Kitces and Wade Pfau known as the rising equity glide path.

The rising equity glide path would do better to guard against the Sequence of Return Risk for early retirees. However, when the bulls are running it will leave a smaller portfolio.

Risk Reward balance.

Yes, I'm a bigger fan of the bond tent than I was when I retired in 2017.