The Pendulum May Be Swinging Back Toward The 60/40 Portfolio

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Some Advisors Are Turning Back To The 40/60 Model (Investment News)

Many advisors are sticking with the traditional 60% stocks and 40% bonds formula. These advisors argue that some of their counterparts are over-diversifying at a time when they worry about a poor returns from bonds, and a stock market correction, reports Megan Durisin of Investment News.

“Everyone is looking for the silver bullet. Everyone is looking for returns without risk. From a performance standpoint, it hasn’t been good for people to chase those returns,” James Osborne, president of Bason Asset Management, told Investment News.

John Osterweis, chairman and CIO of Osterweis Capital Management said, “60/40’s been beating the geniuses … I just have a feeling that the pendulum may be ready to swing back.”

FINRA Chief Thinks Investors Aren’t Aware Of The Impact Of Bond Volatility On Their Portfolios (The Wall Street Journal)

Investors aren’t quite cognisant of the impact that significant volatility in bonds can have on their portfolios, the Wall Street Journal cited Richard Ketchum, CEO of the Financial Industry Regulatory Authority (FINRA), as saying. “I would focus as an adviser more on negative scenarios,” Ketchum said after a panel discussion. “And if I were a firm, I would focus on the training and education of those advisers to make sure that they look at…negative scenarios.”

The Economist Who Invented The BRICs Just Invented A Whole New Group Of Countries: The MINTs (Bloomberg View)

Former Goldman Sachs asset management chief Jim O’Neill who previously coined the term BRICs has coined a new term: the MINTs, an acronym for a new potential investment haven. This refers to the economies of Mexico, Indonesia, Nigeria and Turkey. All of these “have very favourable demographics for at least the next 20 years, and their economic prospects are interesting,” according to O’Neill.

A Great Rotation Back To Stocks May Already Be Underway (Kleintop Financial)

Jeff Kleintop of LPL Financial thinks retail investors chasing higher returns are going to flood into the stock market in 2014. “In fact, a great rotation back to stocks may already be underway,” he says.

Kleintop points out that the difference between five-year annualized return of stocks and bonds has started to soar. “The gap between stock and bond market returns over the past five years as of the end of last week widened to 10%. As of March 6, 2014, five years from the bear market low in the S&P 500 — even assuming no additional gains in the stock market between now and then — the five-year annualized return may have exceeded bonds by 20%!”

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