When looking to the markets, there are a lot of historical rules that we all seem to take for granted or verbatim—things like the 4% rule, which looks at portfolio withdrawal rates, or “sell in May and go away”, which helps investors plan for the fact that many traders are away for the Hampton’s summer brunch season. Most of these adages and rules exist because they work and have done so for quite a while.
However, in today’s “new normal,” many of these older rules and sayings are being challenged and, in some cases, being proved completely wrong.
One of the biggest of these rules could be the classic 60/40 portfolio. the mix of stocks and bonds has served investors’ well over the decades—but now some market pundits and analysts have called to question the 60/40’s effectiveness in producing great returns.
The question is: Are they right or does the 60/40 still hold water?