Is « 60/40 Portfolio » dead? \ stacker news ~Personal

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182 sats \ 4 comments \ @Anonymous_Hodler 19 Jan 2024 Personal_Finance

We’ve been explained for so many years that an investment portfolio should be balanced with 60% equities like stocks, and 40% « safe » bonds… Today, Bitcoin is available to the public and I am sure a lot of investors are now wondering how to deal with it. How much of a portfolio should be allocated to alternative investments such as Digital assets? Is it 1% to 5% just for diversification? Is it 5% to 20% for risky growth? Should you have most of your capital invested in Bitcoin? How should you rebalance? Selling bonds, stocks, both? And in what proportion?

Do anyone have a particular point of view on that topic? Do you think bonds aren’t safe anymore with all that debt accumulating and the risk of the US government to default?

Please share your feelings with me and let’s discuss investment strategies…

Until then, stay humble and stack sats my friends!

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41 sats \ 1 reply \ @hodlpleb 19 Jan 2024

Wealthy people own much of their wealth in single, large assets.

Do you think anyone advises Zuckerberg or Bezos to put 40% of their wealth into bonds?

60/40 is what we’ve been sold as a way to not end up poor - but your financial advisor is unlikely to make you rich. They have to play it safe, keep up with inflation, not scare you away due to a 1 year drawdown.

Your financial advisor would have told you to sell Apple & Amazon when you had doubled your money… and you’d have missed out in the long run.

If you believe that bitcoin will continue to grow and you can back that reasoning up with logic, then why would you not consider putting a large % in?

0 sats \ 0 replies \ @Anonymous_Hodler OP 19 Jan 2024

I totally agree with that… It was more of a rethorical question… I still think diversification is an important factor, but there isn’t only one recipee to make a good cake, right?

10 sats \ 0 replies \ @TNStacker 20 Jan 2024

60/40 was always an oversimplification of the asset allocation narrative, because Americans, in particular, are scared of math, economics, and finance. 60/40 actually neglects cash, which, of course, must be included.

What if you own businesses? You probably should reinvest in your business and yourself over some 60/40 number selected by wall street to skim off your energy through fiat activity. What about real estate? How on earth do they skip property as a store of wealth or investment? It is because they want all the property. And they want us all renting - sending them cash flows in perpetuity.

Don't get me wrong, mathematics was used to come up with a portfolio that should minimize the volatility of stocks. And it does. The problem is most of the rules and principles of finance were created during times of hard money (gold) backed currency. Yet, we live in a fiat world. A world where the banks get to "create" money. They also get to charge fees and skim (tax) your energy from you by being between (intermediaries) you and your vendors. They get to use your money in more ways than you can.

So, yes 60/40 is dead. They never should have birthed it.

0 sats \ 0 replies \ @OriginalSize 19 Jan 2024

I don't know why I'm hearing so much about 60/40 now. The recommendation that always made sense to me is based years-to-retirement. Once you get inside 15-20 years to retirement it makes sense to shift capital you'll depend on into safer places. To the extent that you've done well that tends toward a small percentage.

Allocations into Bitcoin have much more to do with education. People should get some, learn about it and buy more per the level of conviction they obtain. For the zealots, that's a Bitcoin standard. For the conservative, they may never get above 1-5% voluntarily but may find it growing with little reason to sell.