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25/25/25/25
A couple of days ago, I mentioned the 25/25/25/25 portfolio again.
The case for embracing an asset allocation strategy that's radically different from the vaunted 60/40 split is pretty simple: The macro regime shifted in the 2020s, and when it did, the correlation assumption that underpinned 60/40 stopped working. As such, most manifestations of balanced stock-bond strategies suffered among their worst drawdowns on record.
Whether or not 60/40 is well and truly dead is a matter of (contentious
I don’t believe that Harry Brown, when he conceived the 25/25/25/25 portfolio, ever imagined that the Federal Reserve would crush price discovery for over a decade. In the 80’s, when the Permanent Portfolio came out, QE wasn’t in the Fed’s vocabulary. Things have tilted so far, so fast, that I wouldn’t be surprised to see the Fed embark on YCC sometime in the future. That seems to take one of the four pillars out from under the 25/25/25/25 allocation.