It worked until it didn’t.

For most of 2026, and particularly post-Iran war onset, the winning trade was 60/40. Just not in the traditional sense of the term.

“Old” 60/40 perished with the four-decade bond bull. Wall Street’s floated a variety of replacement strategies, but in 2026, the best actor award for the role of “new 60/40” went to Charlie McElligott’s semi-energy barbell.

Semis were your risk-on “asset” and energy was your hedge in an environment where risk-off days tended to be sessions when oil was up on some fresh f-ckery out of the Holy Land, where Benjamin Netanyahu roped Donald Trump into precisely the sort of open-ended, regime change war he promised to avoid at all costs.

McElligott’s “new 60/40” accrued spectacularly — and in spectacularly smooth fashion, running up a near 70% return during the first 10 months of the year on an (absurd) 3.3 Sharpe.

Nothing lasts forever, though. This week, the midterms came for “new 60/40.”

There’s the chart. Energy’s down 11% and semis an egregious 14%.

“The two parts of the ‘Best Trade of the Year’ just got leg-swept [as] the US electorate voted Blue on a rather clear ‘anti-data center’ platform,” McElligott wrote Thursday, as the chips bled out.

On the energy side, JD Vance’s remarks on (read: excuses for) one of the worst midterm wipeouts for either side of America’s political duopoly in living memory pretty plainly suggest that even if Trump’s inclined to lean in on the war (if you’re a lame duck and Congress is controlled by the other party, foreign policy’s all you got), he’s likely to get pushback from GOPers looking to 2028.

“They might be losing resolve and finally tapping on Iran,” Charlie said, of The White House. “So the Energy sector’s war premium is getting slapped too.”

The figure above, from his note, shows you the swoon both for “new 60/40” and for the “enablers versus spenders” trade. The latter was torpedoed by the “two sides of the same blue sweep coin” dynamic where the perception of slower data center buildouts eased FCF concerns for the hyper-scalers while simultaneously upper-cutting already wobbly semis.

In the same note, Charlie reminded investors that we came into this week with lopsided positioning on these YTD winning trades — because that’s what happens when the market’s more “giant momentum-driven casino” than “price discovery mechanism.”

“The world remains stuffed on this stuff, from equities hedge funds to mutual funds to retail to VC to PE to SWFs and endowments,” he wrote. “Conversations with clients are telling me they’re feeling incentivized to take risk down [and] preserv[e] residual shreds of remaining YTD performance [to] stay alive into next year’s fresh capital and risk budget.”