TAKE RIGHT NOW GOING INTO THE
END OF THE YEAR.
ON THE BARRON’S ROUND TABLE.
ALL MY COLLEAGUES ARE HERE.
LET’S AGAIN, CARLTON, WITH AT
TRADITIONAL 60/40 INVESTMENT
PORTFOLIO AND CLASSIC APPROACH
TO INVESTING IN STOCKS 60% AND
BONDS 40%.
STOCKS GIVE YOU THE GROWTH AND
BONDS ACT AS A SHOCK ABSORBER
BUT THIS MODEL CAME INTO
QUESTION WHEN BOND YIELDS WERE
AT ZERO AND YIELDS SKYROCKETED
AND WASHINGTON JOURNAL REPORTED
THE 60/40 PORTFOLIO ON TRACK FOR
WORST PERFORMANCE SINCE 1937.
THAT DOES NOT MEAN IT’S A BAD
IDEA.
>> RIGHT, I MEAN, YOU DON’T WANT
TO SAY THE 60/40 PORTFOLIO IS
DEAD.
A LOT OF PEOPLE HAVE.
JACK: GOOGLE IT, IT’S ALL OVER
THE INTERNET.
>> THINK, WHEN YOU’RE BUILDING A
PORTFOLIO, YOU’RE DOING IT FOR
THE LONG TERM.
THAT MEANS SOME YEARS EVERYTHING
WILL WORK AND SOME YEARS NOTHING
WILL WORK AND SOME YEARS THERE’S
A BIT OF THIS AND BIT OF THAT
AND HOPE YOU KIND OF COME OUT
AHEAD.
SO, YES, WE ARE LOOKING AT
VARICOSE VEINSAT AVERY CHALLENGI
THE MIDDLE OF NOVEMBER AND 15%
ROUGHLY ON PAR WITH A DROP IN
S&P 500 OVER THE SAME PERIOD AND
BONDS ENTERING A BEAR MARKET AND
AGAIN, IT DOESN’T MEAN THE
SYSTEM IS DEAD.
IT’S JUST, YES, IT’S A
CHALLENGING YEAR AND YOU DON’T
WANT TO MINIMIZE THAT BUT I WANT
TO ADVISE IT AND DIDN’T WANT TO
CHANGE DRASTICALLY.
JACK: STOCKS ARE CHEAPER AND
BONDS GIVING YIELD, 4.5% OR SO.
>> YEAH, THAT’S SOMETHING THAT,
I MEAN, OVER THE LAST 15 YEARS
WAS BASICALLY NEVER HAPPENING
AND ON THE BOND SIDE OF THE
PORTFOLIO AS YOU POINT OUT,
YOU’RE GETTING 4% YIELD AND
HEADING INTO RECESSION THEIR
ENVIRONMENT, BOND PORTFOLIOS
HAVE HELD UP WHEN TALKING ABOUT
TREASURIES, THE FIGHT TO SAFETY
AND SOMEONE COMING IN NOW,
YOU’RE COMING IN AT A LOWER
POINT.
>> 60/40 RIGHT, NOT FOR
EVERYONE.
HOW DO YOU TELL WHAT’S THE RIGHT
MIX FOR YOU?
70/30, WHAT HAVE YOU?
EVERYONE SAYS AGE.
HOW MUCH SHOULD BE WEALTH AND
WHAT YOU’RE USING THE MONEY FOR?
FOR CONTEXT, I’M 85 YEARS OLD
WHICH IN THE U.S. MAKES ME RUN
FOR PRESIDENT IN 1 12 YEARS AND
MIGHT NEED CAMPAIGN CASH.
>> FOR THAT GO INTO BITCOIN.
WITH THE 60/40, THE THINKING WAS
USE THAT KIND OF BOND ALLOCATION
WITH YOUR AGE.
IF YOU’RE 40 YEARS OLD, 41 BOND
ALLOCATION AND THINK ABOUT,
OKAY, WHAT IS -- WHAT ARE YOUR
NEEDS.
THAT’S WHAT IT’S ABOUT WITH
PORTFOLIO CONSTRUCTION AND WHAT
DO YOU NEED AND WHEN?
THAT’S THE DETERMINING FACTOR OF
HOW MUCH IN ASSETS DO YOU WANT
TO HAVE IN RISKIER ADVENTURES
VERSUS MORE CONSERVATIVE ONES
AND BUYING A HOUSE AND PAYING
TUITION AND NET WORTH TO HANDLE.
>> BUYING 16 MORE CHAIN SAWS ON
HAND FOR THAT.
JACK: BEN, START WITH THE 60%.
THAT’S YOUR STOCK PORTFOLIO.
WHERE DO YOU PUT IT IN THE STOCK
MARKET?
>> THE GOOD THING IS STOCKS ARE
SO MUCH LOWER THAT YOU REALLY
CAN’T GO WRONG IF YOU START
INVESTING IN LONG TERM RIGHT
NOW.
I THINK WE’RE ENTERING THE POINT
WHERE WE WANT TO BE INVESTING IN
STOCKS, NOT SECTORS AND WE HAD A
LONG PERIOD WHERE TECH STOCKS
OUTPERFORMED EVERYTHING OR TECH
ADJACENT STOCKS AND THIS YEAR
ENERGY WAS THE ONLY THING THAT
WENT UP.
BUT WE WANT TO LOOK AT
INDIVIDUAL STOCKS CAUSE IT’S
GOING TO BE THE ENVIRONMENT WITH
GOOD MANAGERS DO WELL AND OTHER
MANAGERS NOT SO WELL.
THAT MEANS LOOKING FOR FUNDS
THAT ARE MAYBE CORE FUNDS, NOT
VALUE OR GROWTH, BUT A MIX OF
EVERYTHING, THINGS LIKE PERHAPS
THE T ROPE, PRICE DIVIDEND
GROWTH.
THAT’S PRDGX OR AMERICAN FUNDS
WASHINGTON MUTUAL, AWSHX.
BUT AN EASY WAY IS LOOKING AT
EQUAL WEIGHTED S&P 500 VERSUS
S&P 500 WHICH WOULD BE RSP.
>> I WOULD BE REMISS TO NOT
POINT OUT JUST A SIMPLE STRAIGHT
INDEX FUND VANGUARD TOTAL MARKET
INDEX BEATEN ABOUT 80% OF
MANAGED FUNDS OVER THE LONG
TERM.
JACK, TAKE US TO THE 40, HOW DO
WE INVEST IN BONDS?
>> EXCITING PART YOU’RE SAVING
FOR ME, THE BONDS.
JACK: BEFORE THE CUP OF COFFEE.
>> 4% THEREABOUTS ON TREASURY
AND MAYBE 5% ON THEM AND THERE’S
ALWAYS SOME KIND OF INVESTMENT
SALES SAYING YOU CAN DO BETTER
ON PREFERRED STOCKS OR BETTER ON
THIS OR THAT OR JUNK BONDS, THIS
OR THAT ASSET CLASS AND THIS
PORTION OF THE PORTFOLIO IS
KEEPING YOUR MONEY SAFE.
I WOULD SAY KEEP IT BORING.
WHEN TALKING ABOUT THINGS LIKE
RATES, OTHER INCOME PRODUCING
ASSETS AND THINK OF THOSE AS
PART OF STOCK PORTION OF
PORTFOLIO AND DON’T WANT TO HEAR
ABOUT THE MATH MODEL OF HOW THE
INVESTMENTS AREN’T CORRELATED
WITH STOCKS AND CORRELATIONS ALL
CHANGE WHEN THE MARKET COMES AT
TIMES OF STRESS AND RISKY STUFF
ACTS LIKE STOCKS STOCKS AND NOT
WHAT IT ACTED LIKE IN THE PAST.
GETTING 4 TO 5% OF THE SAFE PART
OF PORTFOLIO, THAT’S GETTER THAN
A FEW YEARS AGO AND DON’T WORRY
THE LATEST PRINT ON INFLATION IS
7% AND CHANGE.
THAT’S A BACK WARD LOOKING
FIGURE ALSO AND NEXT YEAR, I
DON’T KNOW WHAT INFLATION NEXT
YEAR WILL BRING AND I WOULD
GUESS IT’S NOT 7%.
I HAD TO CHECK MY NOTES FOR NEXT
YEAR’S INFLATION.
JACK: HOW DOES THE INVESTOR GET
ACCESS TO THE SAFE
STRAIGHTFORWARD 4 AND 5%
YIELDING BONDS?
>> MOST INVESTORS CAN BUY A
FUND.
BND, THAT’S A TICKER FOR
VANGUARD TOTAL AND BOND MARKET
IS A ONE STOP SHOP FOR BONDS AND
ETFS LIKE THAT.
IF YOU WANT TO BUY TREASURIES ON
AUCTION AND JUST BUY THE
CORPORATE BONDS AND ETF, THERE’S
LQD, ANOTHER ETF.
IF YOU’RE TALKING ABOUT MILLIONS
OF DOLLARS PUTTING BONDS, HIRE
SOMEONE FOR YOU AND YOU HAVE