Is the 60/40 Portfolio Is Obsolete?

The traditional 60/40 portfolio of 60% stocks and 40% bonds has been a staple of investment advice for decades. But in 2022, it failed to deliver the goods, declining about 16%.

Mark Cortazzo says that the rapid rise in interest rates has caused a “massive change” in fixed-income returns. This means that traditional safe assets are back, and it’s time to reset portfolios.

Cortazzo is a Senior Vice President and Financial Advisor with the Wealth Enhancement Group. He has over 30 years of experience in the financial industry and has been named a Barron’s Top Advisor for thirteen years.

Cortazzo discusses the massive reset in returns and what it means for investors. He also provides tips on how to realign your portfolio for the new environment.

WEALTHTRACK Episode #2011 broadcast on August 04, 2023

Listen to the audio-only version here:

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MARK CORTAZZO

Senior Vice President & Financial Advisor
Wealth Enhancement Group

ACTION POINT

DESIGN YOUR PORTFOLIO WITH THE WORST 2% OF CONDITIONS IN MIND

Advice from “THE FOUR PILLARS OF INVESTING” by William Bernstein
William Bernstein, a retired neurologist, Investment Adviser, Co-Founder Efficient Frontier Advisors, Author

“… it’s a huge, and usually fatal, mistake to design a portfolio without focusing primarily on those approximately 2% of times that will cause you to lose your nerve and violate Charlie Munger’s prime directive of compounding. As Munger, who is Warren Buffett’s partner, puts it: ‘The first rule of compounding is to never interrupt it unnecessarily.’ … holding plenty of safe assets—like dull, low-yielding Treasury securities—and being prepared to see your risky assets get periodically, and hopefully temporarily, slaughtered.”

The Wall Street Journal
Journal Reports: Investing Monthly
William Bernstein on Investors’ Biggest Risk: Not Preparing for the Worst
(August 7, 2023 print edition – August 4, 2023 online edition)

BOOKSHELF

Your Future Self: How to Make Tomorrow Better Today

The Four Pillars of Investing, Second Edition: Lessons for Building a Winning Portfolio

ONE INVESTMENT

ATTRACTIVE RISK-FREE RETURNS

Consider FDIC-insured, high-yielding money market accounts & US government securities. Current yields are 5%+

STOCK, BOND, FUND MENTIONS

Innovator U.S. Equity Power Buffer ETF (PJUN)

WEB EXTRA

PLANNING FOR THE FUTURE

Award-winning financial advisor Mark Cortazzo highly recommends reading Your Future Self: How to Make Tomorrow Better Today by Hal Hershfield to better understand and plan for your future emotionally, physically, and financially.