From Dow Jones & Company:



After two years of lackluster performance, there is speculation on Wall Street that the traditional 60-40 portfolio may no longer be useful. However, with the yield on the 10-year Treasury note hovering around 4%, some strategists argue that bonds are still compelling investments and could offer rewards for years to come, especially with the Federal Reserve expected to cut interest rates. Michael Lebowitz, a portfolio manager, has increased his allocation to bonds, citing the potential for continued yield declines. The article also mentions that the relationship between stocks and bonds tends to normalize once inflation slows to a certain level, which is expected to happen in 2024. However, the dismal performance of 60-40 portfolios in the past two years has sparked questions about their relevance for contemporary investors. Some experts argue that excluding bonds from portfolios would not be wise, given the current yield levels and the potential for attractive returns in the long term. The article also highlights the potential impact of expected interest rate cuts by the Fed on long-term investment plans.



Original: Why the 60-40 portfolio is poised to make a comeback in 2024