For long-term investors, the drop in stock valuations and the rise in bond yields in 2022 sets the stage for future average returns of 6.9% on the 60/40 mix, according to Leuthold Group, a market research and money management firm.
Putting 60% of a portfolio in stocks and 40% in bonds is supposed to hedge against both assets dropping simultaneously. But it didn’t pan out that way in 2022.
Inflation and rising interest rates whacked both asset classes, and a Bloomberg index tracking a 60/40 mix is down about 17% for the year. But some veteran investors say the classic approach to investing still makes long-term sense, and that bonds are positioned to regain their status as a good counterweight to stocks.
