OTW #47: 60/40 debunked, Lessons from a legend, and more.
Important financial stories to check out over the weekend
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1. The 60/40 portfolio is debunked.
Brian Livingston, founder and author of Muscular Portfolios, debunked the traditional 60/40 portfolio (i.e. 60% stocks, 40% bonds). He convincingly argues that this common allocation strategy no longer provides the safety or returns it once did.
Livingston notes that large financial institutions have shifted away from this model and are now investing in hard assets and alternatives. He also highlights the diminished role of bonds as a stable store of value, noting the asset’s significant losses in recent years, especially during periods of high interest rates and inflation.
Livingston also criticizes the assumption that more risk equals more return, a notion rooted in outdated economic theories. He instead advocates for a dynamic portfolio approach, emphasizing momentum and the ability to adjust to changing market conditions. Read more…
Antagonist’s take
If you have a traditional retirement portfolio or invest in target-date funds, this is one of the most important articles you’ll ever read. It can save you tens of thousands of dollars…or more!
Livingston’s critique of the 60/40 portfolio is a wake-up call for investors who are clinging to conventional investment strategies. The financial landscape has evolved, which has rendered many past approaches ineffective.
Therefore, I urge you to consider strategies that adapt to market changes and rotate into asset classes that are showing strength.
The simplest and most effective way for most investors to do this is through a momentum strategy like the Papa Bear by Muscular Portfolios.
I’ve written about the Papa Bear many times (here’s an example). It’s free, takes just 10 minutes per month to implement, and has been shown to consistently beat the S&P 500 over a full market cycle.
2. Lessons from a legend.
Investing legend Charlie Munger passed away last week. He was vice chairman of Berkshire Hathaway and Warren Buffett’s closest partner and right-hand man.
Greg at
compiled a list of some of Munger’s best quotes on the stock market, learning, and life in general.Antagonist’s take
There’s a lot to love about Charlie Munger. His investing success speaks for itself, but I especially appreciate the way he ran his business. He didn’t get caught up in fads, and he was never afraid to go against the crowd and conventional wisdom.
Take a few minutes and read through the quotes compiled by
. I’m confident you’ll find them insightful and motivating:3. The conditions that will make gold soar.
In the Nov. 19th edition of OTW, I wrote about the potential for gold to surge by 8x over the next decade. A recent commentary by The World Gold Council explains the market conditions that could catapult the metal to those record highs.
Antagonist’s take
The report is loaded with data and historical analyses that detail the conditions under which gold thrives. I found the chart below particularly interesting. It shows how gold tends to perform very well when equities enter a bear market.
If stocks crater over the next year, look for gold to set new highs on a regular basis.
And for ideas on how to invest in gold itself as well as in gold stocks, check our Blend Portfolio. You can try it for free for 7 days.
Last thing...
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Thank you for reading, and have a great weekend!
Jason Milton
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Great weekly summary, thanks for the link to us!