The 60/40 stock/bond mix can result in periods of no return

 

Still spending time on the 6/40 stock bond mix. The reason is simple - it is the benchmark for asset allocation. Yes, it works; however, investors should be aware that there are extended periods of flat returns. You can have lost decades of no performance. The challenge is finding alternatives during these flat periods, especially when real yields are negative. Can alternative investments do the trick? The core solution is to find positive real returns with low correlation to equities. Trend-following can do it, but the core returns do not match the periods of lost decades. The challenge is finding the right mix at the right time, with clear rules for triggering a switch in asset allocation.