The 60/40 Stock-Bond Weight Rule Needs To Go On A Crash Diet

DataTrek Cofounder Nick Colas’ commentary on CNBC:

“The classic 60/40 rule — an investor should put 60 percent of their portfolio in stocks and 40 percent in bonds — is popular for a reason: It has a good historical track record of delivering equity-like returns, while lessening the risk of serious annual portfolio drawdowns.

Here are a few basic statistics that prove that point.

Since 1928 — the first year data were available — a 60/40 portfolio of the S&P 500 and 10-Year Treasurys has delivered an average annual total return of 9 percent, or 78 percent of the total return for just the S&P 500 (11.5 percent). After inflation (using annual CPI) this translates to a 5.9 percent average total return for 60/40, or 70 percent of the average real returns for the S&P 500 (8.4 percent)…”

You can read the rest here on CNBC.

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