The Old Way Isn't Going To Work Anymore

Short post tonight. I was playing around with a couple of slight variations on the types of portfolios we typically look at and then I noticed that testfol.io has a bunch of preset portfolios like All-Weather and Permanent Portfolio (the Harry Browne original). The presets are mostly well known portfolios so below are two variations of what we talk about compared to three of the labeled preset portfolios

It doesn't even matter what's in Portfolios 1 and 2 although regular readers could probably guess. The point is that the old way of large allocations to bonds with duration is not going to work as well in a world where bonds with duration are no longer a one way trade down in interest rates. That ended in late 2021. Bonds now have a different volatility profile than they used to and the relationship to equities in terms of how they correlate has changed too.

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