60/40: They're coming for you

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McQ
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60/40: They're coming for you

Post by McQ »

Back in May I read a report in Barron’s that the 60/40 balanced mix was on track for its worst year ever. The comment seemed silly from multiple angles:
1. It was a straight-line extrapolation from the first four months of the year, i.e., 3X the decline achieved
2. Because stocks are more volatile than bonds, volatility in a balanced fund must be driven by stock returns, and stocks were not down that much in April; the carnage occurred in bonds.
[see also this thread: viewtopic.php?t=381001&sid=64d8b6c4ec3d ... 91218f0c01]

Now its June and stocks are down 20% too. Time to pull out the historical record and array the 6-month record through 6/30/2022 against all previous 6-month rolls.

Ideally one would look at VBIAX, a true 60/40 mix of “stocks” (all of them) and “bonds” (all maturities and investment-grade issuers). Unfortunately, it only goes back to 1986, too short a span to be probative when investigating claims of “worst ever.”

Fortunately, Vanguard Wellington has a record back to July 1929. Imperfectly, Wellington does not have a 60/40 mix, nor was the allocation consistent over time, nor even the strategy (I recall several posts by Nisiprius on the vicissitudes of Wellington over the years [links welcome]; Bogle’s book “Stay the Course” gives a backstage account.)

It is what it is. Here is a chart of all 6-month rolls for Wellington from 1/1930 through the end of 2021. The dashed line shows the return of negative 16.12% recorded through 6/2022.

Image

Worst ever? Hardly. Because the 20% decline in stocks through June probably wouldn’t make the top 10 (or even 20) for stocks.

Returning to the chart and working backward in time:
1. The decline for Wellington through February 2009 was ten points worse;
2. The dotcom bust, and November 1987, and the demise of the Penn Central in 1970, and the Kennedy bust of 1962, and the invasion of France in 1940 were 6-month periods about as bad for Wellington;
3. The 1973-74 bear market was worse;
4. The 1937-38 bear market was much worse;
5. And of course, the six months through May 1932 reign supreme.

The start of 2022 as the worst six months ever? Puh-leeze. A six-way tie for 5th worst, at best.

Ride on, 60/40, ride on.
Last edited by McQ on Sun Jul 03, 2022 4:08 pm, edited 1 time in total.
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LilyFleur
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Re: 60/40: They're coming for you

Post by LilyFleur »

How do you define "stocks"?

I like the precision in the Wall Street Journal's reporting. THE WSJ reports that Thursday's decline closed out the S&P 500's worst first half of the year since 1970.
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Re: 60/40: They're coming for you

Post by nedsaid »

Channeling Mark Twain, the rumors of the demise of the 60/40 portfolio is greatly exaggerated.
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Re: 60/40: They're coming for you

Post by Mike Scott »

While I tend to agree with you, I don't think Wellington is a convincing case study for the benchmark for all the reasons you mention. Also, I think you meant that you wanted to use VBIAX (rather than VBTLX).
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Re: 60/40: They're coming for you

Post by Itster »

Media needs a story, so they overhype the situation.
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Re: 60/40: They're coming for you

Post by martincmartin »

Cool! Are these real or nominal returns?
GP813
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Re: 60/40: They're coming for you

Post by GP813 »

Itster wrote: Fri Jul 01, 2022 2:10 pm Media needs a story, so they overhype the situation.
Death of 60/40, The end of the 4% rule, Passive Index funds are a powder keg. These dumb headlines are always for clicks and not much else.
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HomerJ
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Re: 60/40: They're coming for you

Post by HomerJ »

LilyFleur wrote: Fri Jul 01, 2022 1:45 pm How do you define "stocks"?

I like the precision in the Wall Street Journal's reporting. THE WSJ reports that Thursday's decline closed out the S&P 500's worst first half of the year since 1970.
This is just bad journalism.

20% declines in the stock market are common. This the worst January-June since 1970, but there have been plenty of 20% declines. They just happened in different months.

Heck, we had a 22% drop in ONE day once, in 1987.

Yes, someone can say "This is the worst FIRST 6 months of the year since 1970", and next year, they might say "This was the WORST last two weeks in February since 1938", and both statements might be true, but they don't really MEAN anything.
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Re: 60/40: They're coming for you

Post by Marseille07 »

GP813 wrote: Fri Jul 01, 2022 2:48 pm
Itster wrote: Fri Jul 01, 2022 2:10 pm Media needs a story, so they overhype the situation.
Death of 60/40, The end of the 4% rule, Passive Index funds are a powder keg. These dumb headlines always are for clicks and not much else.
I don't think those are dumb headlines when we are seeing the worst first half of the year in 52 years.
GP813
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Re: 60/40: They're coming for you

Post by GP813 »

Marseille07 wrote: Fri Jul 01, 2022 2:53 pm
GP813 wrote: Fri Jul 01, 2022 2:48 pm
Itster wrote: Fri Jul 01, 2022 2:10 pm Media needs a story, so they overhype the situation.
Death of 60/40, The end of the 4% rule, Passive Index funds are a powder keg. These dumb headlines always are for clicks and not much else.
I don't think those are dumb headlines when we are seeing the worst first half of the year in 52 years.
So what? One bad year does not justify any of those headline clickbait articles.
Last edited by GP813 on Fri Jul 01, 2022 3:03 pm, edited 1 time in total.
Ricola
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Re: 60/40: They're coming for you

Post by Ricola »

I am still buying VBIAX...guess I am a contrarian now :)
Da5id
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Re: 60/40: They're coming for you

Post by Da5id »

GP813 wrote: Fri Jul 01, 2022 2:58 pm
Marseille07 wrote: Fri Jul 01, 2022 2:53 pm
GP813 wrote: Fri Jul 01, 2022 2:48 pm
Itster wrote: Fri Jul 01, 2022 2:10 pm Media needs a story, so they overhype the situation.
Death of 60/40, The end of the 4% rule, Passive Index funds are a powder keg. These dumb headlines always are for clicks and not much else.
I don't think those are dumb headlines when we are seeing the worst first half of the year in 52 years.
So what? One bad year does not justify any of those headline clickbait articles.
Yep. What is the proper response to the situation? "Run in circles, scream and shout"? Rethink your allocation at what is probably a very bad time to do so based on the fear that these articles encourage?
GP813
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Re: 60/40: They're coming for you

Post by GP813 »

Ricola wrote: Fri Jul 01, 2022 3:00 pm I am still buying VBIAX...guess I am a contrarian now :)
Awesome, keep rolling that snowball down the hill!
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Re: 60/40: They're coming for you

Post by Marseille07 »

Da5id wrote: Fri Jul 01, 2022 3:01 pm Yep. What is the proper response to the situation? "Run in circles, scream and shout"? Rethink your allocation at what is probably a very bad time to do so based on the fear that these articles encourage?
One should absolutely rethink their allocation, not on the stock side but the bond side.
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Re: 60/40: They're coming for you

Post by Itster »

HomerJ wrote: Fri Jul 01, 2022 2:49 pm
LilyFleur wrote: Fri Jul 01, 2022 1:45 pm How do you define "stocks"?

I like the precision in the Wall Street Journal's reporting. THE WSJ reports that Thursday's decline closed out the S&P 500's worst first half of the year since 1970.
This is just bad journalism.

20% declines in the stock market are common. This the worst January-June since 1970, but there have been plenty of 20% declines. They just happened in different months.
Yep, it's purely a stat line and nothing more, turned into a major headline.
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Re: 60/40: They're coming for you

Post by Apathizer »

GP813 wrote: Fri Jul 01, 2022 2:58 pm
Marseille07 wrote: Fri Jul 01, 2022 2:53 pm
GP813 wrote: Fri Jul 01, 2022 2:48 pm
Itster wrote: Fri Jul 01, 2022 2:10 pm Media needs a story, so they overhype the situation.
Death of 60/40, The end of the 4% rule, Passive Index funds are a powder keg. These dumb headlines always are for clicks and not much else.
I don't think those are dumb headlines when we are seeing the worst first half of the year in 52 years.
So what? One bad year does not justify any of those headline clickbait articles.
Exactly. Diversification only reduces the likelihood of loss; it doesn't guarantee. Since stocks and bonds have low correlation it's unlikely both will depreciate simultaneously, but unlikely doesn't mean impossible, and unlikely things happen. In a complex, unpredictable world and financial markets, that's to expected at least occasionally.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
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Re: 60/40: They're coming for you

Post by tennisplyr »

Just one point in time…it’s not how you start, it’s how you finish. Ignore the noise.
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HomerJ
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Re: 60/40: They're coming for you

Post by HomerJ »

Marseille07 wrote: Fri Jul 01, 2022 2:53 pm
GP813 wrote: Fri Jul 01, 2022 2:48 pm
Itster wrote: Fri Jul 01, 2022 2:10 pm Media needs a story, so they overhype the situation.
Death of 60/40, The end of the 4% rule, Passive Index funds are a powder keg. These dumb headlines always are for clicks and not much else.
I don't think those are dumb headlines when we are seeing the worst first half of the year in 52 years.
You're being tricked. It's still only a 20% decline. We've had multiple 20% drops in the past 52 years...

Sept-Dec 2018 was a 20% decline... That was over 4 months instead of 6 months and during different months of the year.

But it's not like it's been 52 years since we've seen a 20% decline over a few months.

The headline can be technically correct and still dumb and misleading.
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Re: 60/40: They're coming for you

Post by Expro »

We Bogleheads should try our hands at writing a few Headlines - technically correct but agendized in some way.

I'm not clever enough to take a stab but I'd be interested to see what others might manage.
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Re: 60/40: They're coming for you

Post by slicendice »

I took this thread as a contrarian indicator and TLH'd VTI into NTSX.
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geniekid
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Re: 60/40: They're coming for you

Post by geniekid »

The fundamental mechanics of bonds have not changed over the last few years. Inflation and interest rates have always been a risk for bond holders. It's dangerous (or at least anti-Bogleheadish) to let recent performance or predicted future performance guide one's allocation.

That said, periods of bad performance can sometimes highlight incompatibilities between one's risk tolerance versus their allocation and it's not bad to realign the two if it helps the investor stay the course the next time. Unfortunately, it feels like YTD bond performance has driven some investors into thinking "tactical asset allocation" is necessary for success going forward.
Last edited by geniekid on Fri Jul 01, 2022 4:36 pm, edited 1 time in total.
Marseille07
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Re: 60/40: They're coming for you

Post by Marseille07 »

HomerJ wrote: Fri Jul 01, 2022 3:55 pm You're being tricked. It's still only a 20% decline. We've had multiple 20% drops in the past 52 years...

Sept-Dec 2018 was a 20% decline... That was over 4 months instead of 6 months and during different months of the year.

But it's not like it's been 52 years since we've seen a 20% decline over a few months.

The headline can be technically correct and still dumb and misleading.
The precondition is first half of the year. No one's suggesting -20% was the worst in 52 years.

But as far as 60/40, the real issue isn't about the stocks, it's about the bonds.
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Re: 60/40: They're coming for you

Post by DSBH »

What are the better alternatives and why ? Just wondering …
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Re: 60/40: They're coming for you

Post by Itster »

Marseille07 wrote: Fri Jul 01, 2022 4:37 pm
HomerJ wrote: Fri Jul 01, 2022 3:55 pm You're being tricked. It's still only a 20% decline. We've had multiple 20% drops in the past 52 years...

Sept-Dec 2018 was a 20% decline... That was over 4 months instead of 6 months and during different months of the year.

But it's not like it's been 52 years since we've seen a 20% decline over a few months.

The headline can be technically correct and still dumb and misleading.
The precondition is first half of the year. No one's suggesting -20% was the worst in 52 years.
Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
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Re: 60/40: They're coming for you

Post by Marseille07 »

Itster wrote: Fri Jul 01, 2022 5:27 pm Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
As I mentioned elsewhere, the real issue with regard to 60/40 is actually the bond side, not (yet) the equity side.

And the thing is, it's probably too late to make a move.
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Re: 60/40: They're coming for you

Post by Itster »

Marseille07 wrote: Fri Jul 01, 2022 5:33 pm
Itster wrote: Fri Jul 01, 2022 5:27 pm Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
As I mentioned elsewhere, the real issue with regard to 60/40 is actually the bond side, not (yet) the equity side.

And the thing is, it's probably too late to make a move.
Yeah, sorry. The headline I saw was about the S&P 500 half-year decline being the worst in 52 years, but that is different than the bond side of things from the article. I should also clarify that I am concerned about the overall economy and where things could lead for people, so I don't mean to dismiss that. But it still seems hyped to highlight the 52 years at this point, if it's simply a matter of timing for the present decline.
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Re: 60/40: They're coming for you

Post by SpaceCowboy »

Marseille07 wrote: Fri Jul 01, 2022 5:33 pm
Itster wrote: Fri Jul 01, 2022 5:27 pm Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
As I mentioned elsewhere, the real issue with regard to 60/40 is actually the bond side, not (yet) the equity side.

And the thing is, it's probably too late to make a move.
Using CDs or Stable Value Funds for the 40% fixed income portion helped a lot. 8-)
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Re: 60/40: They're coming for you

Post by Beensabu »

Marseille07 wrote: Fri Jul 01, 2022 5:33 pm
Itster wrote: Fri Jul 01, 2022 5:27 pm Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
As I mentioned elsewhere, the real issue with regard to 60/40 is actually the bond side, not (yet) the equity side.

And the thing is, it's probably too late to make a move.
It's always too late, and then eventually it doesn't matter anymore. There's no need to make a move. All you have to do is wait.
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Re: 60/40: They're coming for you

Post by firebirdparts »

Itster wrote: Fri Jul 01, 2022 5:27 pm
Marseille07 wrote: Fri Jul 01, 2022 4:37 pm
HomerJ wrote: Fri Jul 01, 2022 3:55 pm You're being tricked. It's still only a 20% decline. We've had multiple 20% drops in the past 52 years...

Sept-Dec 2018 was a 20% decline... That was over 4 months instead of 6 months and during different months of the year.

But it's not like it's been 52 years since we've seen a 20% decline over a few months.

The headline can be technically correct and still dumb and misleading.
The precondition is first half of the year. No one's suggesting -20% was the worst in 52 years.
Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
It may not be true. What they were claiming was statistics on a 40% drop instead. I haven’t bothered to really look at the other interesting first halves, but the 2020 calendar was obviously aligned beautifully to be down about 30% in a calendar quarter. You can’t annualize that because stocks can’t go negative. so the headline writers were stymied somewhat, I guess.
This time is the same
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Re: 60/40: They're coming for you

Post by HomerJ »

Marseille07 wrote: Fri Jul 01, 2022 4:37 pm
HomerJ wrote: Fri Jul 01, 2022 3:55 pm You're being tricked. It's still only a 20% decline. We've had multiple 20% drops in the past 52 years...

Sept-Dec 2018 was a 20% decline... That was over 4 months instead of 6 months and during different months of the year.

But it's not like it's been 52 years since we've seen a 20% decline over a few months.

The headline can be technically correct and still dumb and misleading.
The precondition is first half of the year.
Yeah, and who cares? 20% from January to whatever is exactly the same as 20% from March to whatever.

I can't believe you are actually falling for this. It's not a big deal just because it started in January.
No one's suggesting -20% was the worst in 52 years.
What they are suggesting is something bad is happening that hasn't happened in 52 years so you better worry about it, and CLICK ON THIS ARTICLE.

Sheesh.
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Re: 60/40: They're coming for you

Post by Marseille07 »

HomerJ wrote: Fri Jul 01, 2022 8:38 pm Yeah, and who cares? 20% from January to whatever is exactly the same as 20% from March to whatever.

I can't believe you are actually falling for this. It's not a big deal just because it started in January.
No one's suggesting -20% was the worst in 52 years.
What they are suggesting is something bad is happening that hasn't happened in 52 years so you better worry about it, and CLICK ON THIS ARTICLE.

Sheesh.
Buddy, I'm not falling for anything...

The only change I'm making is I'm gathering up more cash because I might buy a house. No crazy moves here.
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Re: 60/40: They're coming for you

Post by GibsonL6s »

I am sticking with 60/40 with the only change to fixed income side, as I am increasing quality and matching duration to my taste by using treasuries.

It is kind of silly to say an asset allocation is dead, which is all this is. Does this mean something else like 70/30 is alive and kicking :D
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Re: 60/40: They're coming for you

Post by SnowBog »

Marseille07 wrote: Fri Jul 01, 2022 9:11 pm The only change I'm making is I'm gathering up more cash because I might buy a house. No crazy moves here.
But you seem to be implying that either you already did or people maybe should have moved away from bonds...
Marseille07 wrote: Fri Jul 01, 2022 5:33 pm As I mentioned elsewhere, the real issue with regard to 60/40 is actually the bond side, not (yet) the equity side.

And the thing is, it's probably too late to make a move.
FWIW - we are in our mid-40's and still riding our 60/40 AA. Ultimately, 60/40 is the right place for us based on our need, willingness, and ability to take risk. I don't see how any of those change in the current markets (and with our situation - still being several years away from retirement - and still likely to have "enough" when we get there).

I always assume the view of those thinking that market conditions affect their AA in some form must think they are able to time the markets... After years of failing to do so - I know I can't time the markets. And thus I'm better off not attempting to play that game... I just set my AA correctly, save aggressively, and take what the market gives me. It should be "enough"...
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Re: 60/40: They're coming for you

Post by Marseille07 »

SnowBog wrote: Fri Jul 01, 2022 11:26 pm I always assume the view of those thinking that market conditions affect their AA in some form must think they are able to time the markets... After years of failing to do so - I know I can't time the markets. And thus I'm better off not attempting to play that game... I just set my AA correctly, save aggressively, and take what the market gives me. It should be "enough"...
I think it's a difficult situation rn. Bonds should eventually recover, the question is when. We might be talking about 2025, 2027, it's anyone's guess.
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Re: 60/40: They're coming for you

Post by UpperNwGuy »

Marseille07 wrote: Sat Jul 02, 2022 12:05 am
SnowBog wrote: Fri Jul 01, 2022 11:26 pm I always assume the view of those thinking that market conditions affect their AA in some form must think they are able to time the markets... After years of failing to do so - I know I can't time the markets. And thus I'm better off not attempting to play that game... I just set my AA correctly, save aggressively, and take what the market gives me. It should be "enough"...
I think it's a difficult situation rn. Bonds should eventually recover, the question is when. We might be talking about 2025, 2027, it's anyone's guess.
I’m fine with that. Why aren’t you?
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Re: 60/40: They're coming for you

Post by Northern Flicker »

Max drawdown of the Vanguard Balanced index fund from inception to the end of 2021 was a drop of 32.57%.

https://www.portfoliovisualizer.com/bac ... ion1_1=100

In 2022 the drop has been 17.1%

https://www.portfoliovisualizer.com/bac ... ion1_1=100

Using intermediate treasuries instead of total bond the drop was 15.73%

https://www.portfoliovisualizer.com/bac ... tion2_1=40

You may be inclined to point out that VFIUX has a little bit shorter duration than total bond, but historically a treasury portfolio could match and even exceed the downside protection of total bond with a shorter duration:

https://www.portfoliovisualizer.com/bac ... tion3_2=40
Last edited by Northern Flicker on Sat Jul 02, 2022 1:47 am, edited 1 time in total.
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Re: 60/40: They're coming for you

Post by SnowBog »

Marseille07 wrote: Sat Jul 02, 2022 12:05 am
SnowBog wrote: Fri Jul 01, 2022 11:26 pm I always assume the view of those thinking that market conditions affect their AA in some form must think they are able to time the markets... After years of failing to do so - I know I can't time the markets. And thus I'm better off not attempting to play that game... I just set my AA correctly, save aggressively, and take what the market gives me. It should be "enough"...
I think it's a difficult situation rn. Bonds should eventually recover, the question is when. We might be talking about 2025, 2027, it's anyone's guess.
The same is true with stocks... They'll recover at some point. Could be later this year, in 2025, or in 2027.

But I don't attempt to time the market with either stocks or bonds. I'll just let that "time in the market" do its thing for me.
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Re: 60/40: They're coming for you

Post by Broken Man 1999 »

Whew!

I am so glad DW and I are at 56% equities/44% bonds, just a tad bit off our desired AA of 55% equities/45% bonds.

Sure wouldn't want to be one of those 60/40 fools, they are doomed!

Large declines should be expected over the life of our investing experiece, certainly nothing new here in 2022.

Broken Man 1999
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Re: 60/40: They're coming for you

Post by SnowBog »

Broken Man 1999 wrote: Sat Jul 02, 2022 12:01 pm Whew!

I am so glad DW and I are at 56% equities/44% bonds, just a tad bit off our desired AA of 55% equities/45% bonds.

Sure wouldn't want to be one of those 60/40 fools, they are doomed!
Ooh... Good point... We are actually 61/39 right now. I guess I can sleep well tonight! (Oh wait, I slept fine last night too... :wink:)

:beer
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Re: 60/40: They're coming for you

Post by technovelist »

Expro wrote: Fri Jul 01, 2022 4:01 pm We Bogleheads should try our hands at writing a few Headlines - technically correct but agendized in some way.

I'm not clever enough to take a stab but I'd be interested to see what others might manage.
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Re: 60/40: They're coming for you

Post by Marylander1 »

Expro wrote: Fri Jul 01, 2022 4:01 pm We Bogleheads should try our hands at writing a few Headlines - technically correct but agendized in some way.
Pandemic Continues as Cryptocurrencies Suffer Biggest Drop Since Before Black Death
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Re: 60/40: They're coming for you

Post by Dregob »

McQ wrote: Fri Jul 01, 2022 1:39 pm Back in May I read a report in Barron’s that the 60/40 balanced mix was on track for its worst year ever. The comment seemed silly from multiple angles:
1. It was a straight-line extrapolation from the first four months of the year, i.e., 3X the decline achieved
2. Because stocks are more volatile than bonds, volatility in a balanced fund must be driven by stock returns, and stocks were not down that much in April; the carnage occurred in bonds.
[see also this thread: viewtopic.php?t=381001&sid=64d8b6c4ec3d ... 91218f0c01]

Now its June and stocks are down 20% too. Time to pull out the historical record and array the 6-month record through 6/30/2022 against all previous 6-month rolls.

Ideally one would look at VBTLX, a true 60/40 mix of “stocks” (all of them) and “bonds” (all maturities and investment-grade issuers). Unfortunately, it only goes back to 1986, too short a span to be probative when investigating claims of “worst ever.”

Fortunately, Vanguard Wellington has a record back to July 1929. Imperfectly, Wellington does not have a 60/40 mix, nor was the allocation consistent over time, nor even the strategy (I recall several posts by Nisiprius on the vicissitudes of Wellington over the years [links welcome]; Bogle’s book “Stay the Course” gives a backstage account.)

It is what it is. Here is a chart of all 6-month rolls for Wellington from 1/1930 through the end of 2021. The dashed line shows the return of negative 16.12% recorded through 6/2022.

Image

Worst ever? Hardly. Because the 20% decline in stocks through June probably wouldn’t make the top 10 (or even 20) for stocks.

Returning to the chart and working backward in time:
1. The decline for Wellington through February 2009 was ten points worse;
2. The dotcom bust, and November 1987, and the demise of the Penn Central in 1970, and the Kennedy bust of 1962, and the invasion of France in 1940 were 6-month periods about as bad for Wellington;
3. The 1973-74 bear market was worse;
4. The 1937-38 bear market was much worse;
5. And of course, the six months through May 1932 reign supreme.

The start of 2022 as the worst six months ever? Puh-leeze. A six-way tie for 5th worst, at best.

Ride on, 60/40, ride on.
Looking in the rearview mirror rarely, if ever, tells you what lies ahead.
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LilyFleur
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Re: 60/40: They're coming for you

Post by LilyFleur »

SpaceCowboy wrote: Fri Jul 01, 2022 5:57 pm
Marseille07 wrote: Fri Jul 01, 2022 5:33 pm
Itster wrote: Fri Jul 01, 2022 5:27 pm Then why not "Worst First Half In 52 Years Only 20% Down!" That's really my response to the headline. It's not as bad as it sounds -- yet anyway.
As I mentioned elsewhere, the real issue with regard to 60/40 is actually the bond side, not (yet) the equity side.

And the thing is, it's probably too late to make a move.
Using CDs or Stable Value Funds for the 40% fixed income portion helped a lot. 8-)
I moved half of my total bond market fund into the stable value fund in 2020 when bonds first started moving in tandem with equities. I wouldn't want to sell more out of my total bond market fund now, at a 12% loss, though. I am pondering buying more of the S&P 500 fund (at a 22% loss) with some of the bond fund (at a 12% loss). I think tweaking my asset allocation to be a bit more aggressive on the equities side will make up for the lower earnings in the stable value fund. Eventually. In the meantime, it gives me a stable value fund to withdraw from that hasn't lost as much as the other two funds.

When considering rolling over one's savings from a 401k to an IRA, it's worth considering access to a stable value fund. They aren't available in IRAs.
HeavyChevy
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Re: 60/40: They're coming for you

Post by HeavyChevy »

As long as I can remember, Wellington's ~65% stock has been large cap value. Not even close to the 60% large cap blend (growth dominated) total market in recent years. Just sayin'.
"It's not the best move, but it is a move." - GMHikaru
sycamore
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Re: 60/40: They're coming for you

Post by sycamore »

HeavyChevy wrote: Mon Jul 04, 2022 4:07 pm As long as I can remember, Wellington's ~65% stock has been large cap value. Not even close to the 60% large cap blend (growth dominated) total market in recent years. Just sayin'.
FWIW, morningstar has rated VWELX stock allocation as Large Blend for 2020 - 2022. Vanguard or Lipper may rate the fund using different criteria.

Source: https://www.morningstar.com/funds/xnas/vwelx/portfolio, click on the Stock Style button and change it from Map to Historical.
Independent George
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Re: 60/40: They're coming for you

Post by Independent George »

technovelist wrote: Sat Jul 02, 2022 9:46 pm
Expro wrote: Fri Jul 01, 2022 4:01 pm We Bogleheads should try our hands at writing a few Headlines - technically correct but agendized in some way.

I'm not clever enough to take a stab but I'd be interested to see what others might manage.
50% of all investors underperform the market! And 50% of all people make the median income or less!
Isn't it significantly higher than 50% underperforming the market due to behavioral errors? I don't remember the exact stat, but I think you're actually underselling the panic/clickbait potential.
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Re: 60/40: They're coming for you

Post by Wanderingwheelz »

Marseille07 wrote: Fri Jul 01, 2022 3:13 pm
Da5id wrote: Fri Jul 01, 2022 3:01 pm Yep. What is the proper response to the situation? "Run in circles, scream and shout"? Rethink your allocation at what is probably a very bad time to do so based on the fear that these articles encourage?
One should absolutely rethink their allocation, not on the stock side but the bond side.
What makes bonds so special that they need to be reshuffled while stocks on the other hand apparently do not?

IIRC you don’t own any bonds at all, so why do you even care?
Being wrong compounds forever.
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Re: 60/40: They're coming for you

Post by HeavyChevy »

sycamore wrote: Mon Jul 04, 2022 4:27 pm
HeavyChevy wrote: Mon Jul 04, 2022 4:07 pm As long as I can remember, Wellington's ~65% stock has been large cap value. Not even close to the 60% large cap blend (growth dominated) total market in recent years. Just sayin'.
FWIW, morningstar has rated VWELX stock allocation as Large Blend for 2020 - 2022. Vanguard or Lipper may rate the fund using different criteria.

Source: https://www.morningstar.com/funds/xnas/vwelx/portfolio, click on the Stock Style button and change it from Map to Historical.
Vanguard lists it as large value, not blend. From their site:

Investment strategy
The fund invests 60% to 70% of its assets in dividend-paying, and, to a lesser extent, non-dividend-paying common stocks of established medium-size and large companies. In choosing these companies, the advisor seeks those that appear to be undervalued but to have prospects for improvement. These stocks are commonly referred to as value stocks. The remaining 30% to 40% of fund assets are invested mainly in investment-grade corporate bonds, with some exposure to U.S. Treasury and government agency bonds, as well as mortgage-backed securities.

Don't know why Morningstar would disagree with their stated strategy and portfolio.
"It's not the best move, but it is a move." - GMHikaru
sambb
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Re: 60/40: They're coming for you

Post by sambb »

If this allocation has done poorly in the last 6 months, isn’t the contrarian view to actually buy it now if you like the allocation?
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