We have heard a lot of buzz concerning the 60/40 (60% stocks, 40% bonds) portfolio and how it is having a tremendously bad year. Some strategists, like Dylan Grice of Calderwood Capital, have suggested moving to a portfolios of alternative investments or if requiring something simpler to understand then moving to the cockroach portfolio (25% stocks, 25% bonds, 25% cash, 25% gold).
When we look ahead at what is or is not priced in there is something ominous about the fed signaling they still want to crush demand to lower inflation. Rating against the macro scenarios to hedge against (i.e. demand shock, supply shock, inflation shock, trend growth shock, real rate shock) there is becoming fewer and fewer places to turn. Alexandra Semenova suggested a rotation from traditional bonds to equities, which may or may not be good short term advice if the trendline above lasts the expected decade it takes to solve on average. Which all in all is just my way of saying batten down the hatches or we are all going to take on some serious water.