The truth about the 60/40 portfolio myth

[Bill Bonner’s Diary]( The Truth About the 60/40 Portfolio Myth By Bill Bonner, Chairman, Bonner & Partners [Bill Bonner] RANCHO SANTANA, NICARAGUA – Getting ready for a cruise? Taking a plane? Going to a restaurant? Who is that coughing at the next table? He doesn’t look well. The C virus is now on the loose in the U.S. CBS: Mr. Trump said the risk to Americans remained very low, but his bid to ease nerves and shore up jittery stock markets in an election year came as officials confirmed the first case of suspected "community transmission" of the COVID-19 disease in the country. The Centers for Disease Control and Prevention define community spread as the occurrence of cases for which the source of infection is unknown. Japan has closed its schools. Saudi Arabia has closed its religious centers. Villanova University told its students in Italy to come home. And the stock market is getting a serious affliction, too… Recommended Link [Exec order to lead to energy bill rebates in 2020?]( [image]( Do you spend too much on your power bill? If so, [you’re going to love this new tech]( It’s not solar. Wind. Or anything “alternative” at all. In fact, even if you use plain old “hydro” electric or gas, you could still save hundreds. It’s all thanks to a new technology that’s been called "a game-changer for utilities." Already, in one community where Suncor tested it, [people are on track to receive refund checks between $100 and $150 on their power bills](. America’s #1 investor did a full investigation. And what he found is quite stunning… [See Teeka’s top pick]( -- Leave It to the French This morning, we took our usual walk from one end of the beach to the other. It takes about an hour. [image]The crescent beach The waves were huge. “It’s unusual for the season,” explained an old surfer friend. “But you never know when the big waves will come.” Typically, as we walk along we watch the birds, the sea, the sand, and the surfers… and we wonder. Surfers are a scruffy bunch, often covered with tattoos and dressed in baggy shorts and long-sleeved shirts. But there is a group of French surfers on the beach. [1.9 billion 5G smartphones by 2023… This tiny company stands to profit.]( Leave it to the French to come up with a chic surfing outfit. The girls wear what look like wet suits, but with the lower part cut away provocatively, like a bikini bottom. But we stick to our cogitation… Thinking about the stock market, we ask ourselves: What if the whole thing is a giant bamboozle? What if the playing field isn’t level, and the Goldman Sachs guys have a huge advantage? What if Mom-and-Pop investors aren’t really sharing the fruits of American capitalism, and they’re just retail chumps, buying what Wall Street clearly doesn’t want for itself? And what if stocks don’t become more valuable as time goes by? We may have some answers… Recommended Link [Could this man be the next head of U.S. Space Force?]( [image]( Here are the facts: He’s a graduate from Purdue University’s famed “School of Astronauts”… [He was recently spotted at the Pentagon]( He’s attended meetings in highly secured chambers beneath Capitol Hill… He spent time on Nasa’s Ames campus… And he’s a massive supporter of President Trump’s impact on the stock market — the tech market in particular. Is there something going on here? Could this man be the next Head of the US Space Force? It’s hard to tell… But he sure seems like the kind of guy Trump would want to head the U.S. Space Force. [There may be some clues in this video]( -- Fed’s Snake Oil The Dow lost 500 points in 45 minutes yesterday. It began with a drop… tried a weak comeback… and then closed at the low for the day, the biggest one-day point loss in history. “Not good action,” say the old timers. The old timers don’t like it when stocks don’t bounce. It suggests that there are investors still waiting to get out. And this morning, the sellers are back. As we write (10 a.m. ET) the Dow is already down 900 points and falling fast. Wait… it’s 10:05 and it’s down over 1,000! But the feds still have some tricks up their sleeves. Any minute now, we should expect to hear from the Federal Reserve. It will tell us that it is coming to the rescue. [Forecasting Genius Warns Savers About New Law]( As we keep pointing out, though, the Fed can’t actually rescue anything. It is like a quack doctor with nothing but “snake oil.” All it has is fake money. But snake oil can work… when people believe it will work. Maybe stocks will bounce. Rally. Even recover. Who knows? And here is our tip for front-running the Fed: However much stocks continue to fall… gold will fall less. If stocks go up, on the other hand, it will be because the Fed has pushed them up with phony money. Gold will go up more. While fake money (whether in the form of quantitative easing – QE, Repo Madness, or ultra-low rates) may or may not lure investors to buy the dip, it will always make real money (gold) more valuable – at least in terms of the fake money. Meanwhile, if the sell-off continues, investors are bound to begin asking some serious questions. For instance: Is this C virus the only thing causing the stock market correction? Will it cost Donald Trump the next election? What kind of “wealth” is it that the stock market can evaporate so quickly? Here, we will answer that last question: It is fake wealth created by fake money… Recommended Link [The Tech Royalty Retirement Plan can help anyone live like royalty]( [ad_img]( For the first time ever, a new type of tech investment could help you make more money than you will need for the rest of your life. It’s called the Tech Royalty Retirement Plan. It’s an income stream that allows you to collect cash in your hand every day, week, or month – on new technology. Now, if you aren’t familiar with royalties, they’re some of the most exciting investments in history. Royalties are periodic payouts… but they’re much better than stock dividends. While “tech royalties” are different from traditional royalties, just a handful of “tech royalties” could hand you enough income to live life on your own terms. [Learn more about how to potentially profit here]( Balanced Portfolio Myth Here’s a shocking tweet from Christopher Cole to give us a clue: 91% of the price appreciation for the classic portfolio over 90 years came from just 22 years between 1984 and 2007. Large capital flows from boomers, falling interest rates (19% to 0) made this happen. Ask your advisor or pension the trillion-dollar question, is this repeatable? The idea of a long, steady increase in corporate values is a myth. We can see that, too, by looking at our favorite chart. It compares the Dow (the flower of American capitalism) with gold (real money). [Chart] What it shows is that stocks do not go up… and up… and up. Instead, they go up and down! There was no C virus in ’29 or in ’66 or in ’99. But there were big selloffs. And there are always bull markets and bear markets. Stocks begin in one place… climb mountains… sink into valleys… and then come back to where they started. It took 15 ounces of gold to buy the 30 Dow stocks in 1929. By 1933, it took only three. It took 26 in 1965; by 1980, it took less than two. It took 41 ounces in 1999; by 2007, the Dow was on sale again at seven. Today, after yesterday’s sell-off, the Dow-to-Gold ratio is back at 15 – just where it was 90 years ago. So, in real terms investors have made zilch – not counting dividends. Or, to look at the part of the glass that is half full, investors earned their dividends, and nothing more. The dividends earnings from Dow stocks, for example, averaged almost 3%. But Dow stocks are the aristocrats of the investment world. Many stocks don’t pay any dividends at all – including almost all the high flyers on the Nasdaq. The common idea that “holding a balanced portfolio of stocks and bonds over the long run” will make you rich is a myth. That myth is now exploding. Have a nice weekend. Regards, [signature] Bill Like what you’re reading? Send your thoughts to feedback@bonnerandpartners.com. FEATURED READS [World Economy Faces Worst Year Since 2009]( has sent shock waves across the globe, instilling investor fear, stalling supply chains, and closing factories. Now, Bank of America anticipates we could see the worst world economy since the Great Recession… [Doug Casey on a Rise in Commodities]( may be in a long bear market, but Doug Casey – Bill’s longtime friend and legendary speculator – says you can take advantage of uptrends. And now is the time to buy… MAILBAG Dear Readers discuss Coronavirus, the stock market, and Bill’s [win-win theory]( following Wednesday’s Diary, “[How Low Can Stocks Go Before the Feds Step in?]( The COVID-19 outbreak exposes flaws of Bill’s win-win theory. Any business that depends on just one or few clients or suppliers makes for a highly risky investment. This is even more true for a country that depends on one source for 80% of its vital products, such as pharmaceuticals and others, to the point of replacing (bankrupting) local producers. Price should not be the sole criteria in a win-win deal. Making yourself vulnerable to the whims of a single source, especially when that source seeks to dominate you, is foolish. Where’s the win? – Erich K. Your writings are amusing but I think you’re overcomplicating things. Retail, in the balance, can never win in the stock market for one simple reason: it doesn’t get to see the full balance of bids and asks. The dealers do. It is not greed and fear that creates the omnipresent sawtooth patterns in stock prices, but the simple buying and selling of those that have the inside track. The coronavirus hysteria almost certainly coincides with a drying up of the buy side. – John C. Are stock market patterns driven by the insiders, not by greed and fear from the average investor? Does the coronavirus’ effect on the economy undermine Bill’s win-win theory, like Erich believes? Write us at feedback@bonnerandpartners.com. IN CASE YOU MISSED IT… [The FDA Just Handed This Small Cap a “Golden Ticket”]( Silicon Valley angel investor Jeff Brown uncovered a small cap with a breakthrough new treatment [that’s already made it further than 99.9%]( of those the FDA approves for testing. Over the next 12 months, once-in-a-lifetime gains of 3,277%, 5,940% or 10,645% are not out of the question… with just one simple move. Because by law, this tiny biotech must report trial results ASAP. [Click here before it’s too late.]( [image]( [Bonner and Partners]( Bonner & Partners 55 NE 5th Avenue, Delray Beach, FL 33483 [www.bonnerandpartners.com]( [Share]( [FACEBOOK]( [Tweet]( [TWITTER]( This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. 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