Building a Balanced Portfolio: An Unconventional Allocation
Quote ” Since most investors are trying to earn stable returns through time, they aim to maintain a balanced portfolio. The problem, however, is that the vast majority of portfolios are very poorly balanced and are susceptible to violent swings. The reality is that the returns of the conventional portfolio—60% stocks and 40% bonds—are almost entirely dependent on the whims of the stock market. In other words, 60/40 performs well when the stock market is up, and vice versa. In fact, since 1927 a 60/40 portfolio has been 99% correlated to the stock market. Ninety-nine percent!”
