The 60/40 Rule for Stocks and Bonds Is Over. Here’s Where to Invest Right Now.

[TradeSmith Daily]( The 60/40 Rule for Stocks and Bonds Is Over. Here’s Where to Invest Right Now. Stocks are having a terrible year so far, [as I’ve mentioned previously]( but bonds are performing even worse. There’s an old saying on Wall Street, perhaps dating back to the days of J.P. Morgan himself, that “gentlemen prefer bonds.” That may have been true in the recent past. But that preference has completely changed in today’s inflationary environment, and you need to stay in step with the times. Traditionally, the rock-solid, all-weather portfolio allocation for “gentlemen” (and ladies too) has been the so-called 60/40 portfolio. It has been the bedrock of “prudent” investment management for decades — even long before I got into this business 35 years ago. Simply stated, the 60/40 portfolio advises you to place 60% of your assets in stocks and 40% in bonds, so you could hit the golf course with an easy mind and sleep well at night. And according to Barron’s, that advice worked for decades, with a total return of about 9% per year on average and with far less volatility than an all-stock portfolio. But with inflation now surging to 40-year highs and the Federal Reserve dead set on raising interest rates — perhaps significantly — the 60/40 portfolio is quickly going the way of the dinosaur… the same as analysts who cut their teeth investing during the 1980s like me. RECOMMENDED LINK [Free Demo – This App Could Save You $97,347]( The TradeSmith app can help you make thousands of dollars… It could save you hours of time… Make you a better investor in every way… And it costs just a fraction of what your broker charges. I just put together a free demonstration of what the software that powers the TradeSmith app could do for you. And I’m giving everyone who watches a 50% discount on the software that powers the TradeSmith app. [Click Here]( The theory was that stocks and bonds are typically non-correlated asset classes. That’s fancy Wall Street jargon for: When stocks zig, bonds zag. And that was mostly true for many decades. But not anymore. As you can see above, the traditional asset allocation of a 60/40 split between stocks and bonds is bleeding red ink so far this year… at both ends. And bonds, not stocks, are the worst offenders here. If you think stocks have been a bad place to be lately, bonds are far worse. The 30-Year U.S. Treasury Bond Index is down, get this, 14.36% over the past 12 months. The S&P 500 Index, by contrast, is down only 4.47%. In other words, you would have lost three times more money in bonds than in stocks over the past year. The 60/40 portfolio is on track for a total return of -49% this year, based on inflation-adjusted annual returns according to Bank of America Global Research. Let that sink in for a minute… This supposedly low-risk, sleep-well-at-night mix of stocks and bonds could cost you 50% of your wealth in 2022! So much for bonds’ “safe haven” status. The truth is, in a rising-interest-rate, inflationary climate like we have right now, bonds are neither “safe” nor a “haven” from volatile markets. Bonds pay a fixed interest rate over many years. For the 30-Year T-bond mentioned above, you are locking in your money with Uncle Sam for the next three decades in return for an interest rate of just 3%! Folks, yesterday’s Consumer Price Index report shows that inflation accelerated again last month at an 8.3% annual clip. So, after inflation, you are getting a return of minus-5.3% on that “safe” Treasury bond! At that rate, you’ll most likely go broke within that 30-year time horizon. The name of the game today is stocks, hard to believe though it may seem. But not just any stocks. You want cash-rich, quality, dividend-paying “forever stocks,” as TradeSmith CEO Keith Kaplan [recently pointed out](. RECOMMENDED LINK [Today he earns up to $20,000 a week*]( We checked in with Rob after he sent this mind-melting review. Here’s a snippet from the email he sent: “Keith Kaplan… I send my accolades out to you. I've been trading for 8 weeks. I'm up $20,000 per week — that's $160,000 total. I think this service is phenomenal.” While results like Rob’s aren’t “normal” by any stretch… after reading that email, I HAD to follow up with him. So he agreed to hop on a phone call… It was an eye-opening 45-minute conversation where Rob told me: “As of Friday last week, I am up $284,000.” I knew my readers had to hear about this… [So I included more of Rob’s story — including a VIDEO “demo” of the same type of trade on this website (click here)](. * The investment results described in this testimonial are not typical. Investing in securities carries a high degree of risk; you may lose some or all of the investment. Corporate America is in great financial shape today. Even better than Uncle Sam, who has gone even deeper in debt in recent years. By contrast, S&P 500 companies have paid it off, with just $1 of debt for every $1 of profits today, compared to five bucks of debt for every dollar of profit 10 years ago. Plus, corporations are flush with cash. They were sitting on a stash of $7.1 trillion in cash at the end of last year, as you can see above. What will they do with all that cash? Most likely, they’ll buy back their stock, which boosts earnings per share, making their shares more attractively valued. More importantly, they’ll likely dip into all that excess cash flow to boost dividend payouts. Analysts expect 13% dividend growth for S&P 500 companies this year, according to Bank of America Global Research. That is more than twice the expected growth rate of earnings per share of just 6% in 2022. And there is ample precedent to expect this to happen. During the last period of high inflation in the 1970s, S&P 500 companies doubled their dividend payouts. The bottom line is that if you want to protect yourself against inflation and higher interest rates, steer clear of most fixed-rate bonds. Instead, seek out inflation-protected dividend yields from America’s high-quality, cash-flow-rich, dividend-paying stocks. That’s where my “safe” money is invested right now. Good investing, Mike Burnick Senior Analyst, TradeSmith P.S. TradeSmith CEO Keith Kaplan has uncovered a secret “cash corner” of the market that could generate thousands every time you exercise something he calls an “instant cash bet.” Keith says if you trade three stocks like [this]( you could put up to $2,880 “on loop” in your account every month. Best of all, you’re paid in advance. [Click here]( to watch Keith’s live demonstration of his “infinite income loop.” P.P.S. You’re invited to join our Product Education Lead Marina Stroud for her free Intermediate Bootcamp training session. In our second webinar this week, we’ll review TradeSmith’s Ideas Lab. Based on our algorithms, we can rank investment opportunities so you can easily find ones you want to follow. This lesson applies to Ideas by TradeSmith, Trade360, and TradeSmith Platinum members. You can, of course, join if you would like to learn more about our Ideas Lab. [Click here to register]( for today’s webinar. Our webinars begin every Tuesday and Thursday at 1 p.m. Eastern and include time at the end for a question-and-answer session. Best of TradeSmith The chart below represents the best-performing open positions over the last two years, as recommended by our software. [Download now on the Apple Store]( [Get It On Google Play]( [866.385.2076](tel:+866-385-2076) | support@tradesmith.com ©TradeSmith, LLC. All Rights Reserved. You may not reproduce, modify, copy, sell, publish, distribute, display or otherwise use any portion of the content without the prior written consent of TradeSmith. TradeSmith is not registered as an investment adviser and operates under the publishers’ exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith’s content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results. TradeSmith P.O. Box 3039 Spring Hill, FL 34611 [Terms of Use]( [Privacy Policy]( To unsubscribe or change your email preferences, please [click here](. [tradesmith logo]