Investors don’t feel anything yet; it’s like the hole in the bucket that’s full of water. At first, there seems to be plenty of water in the bucket and you can see the water is still near the top. However, if you do nothing, you look down and see there is very little water left. That’s when you panic and action is taken. But that’s really too late. Action should have been taken when the water was full. Checking for holes when there is no sign of holes!
A “nuclear winter” beckons for the 60/40 portfolio in the 2020s, said Vincent Deluard, global macro strategist at StoneX Group, who predicts inflation-adjusted returns could be just a fraction of the 8.1 per cent enjoyed in the past decade.
What does he mean? He means, whilst the bucket is full, it’s full of holes.
Michael Mackenzie writes in the FT, about where returns will be coming from. He says ” It is hard to see where your equity return comes from… and “low bond yields will not help offset a poor performance from the share market. It’s just the math.” Our own limited research, which is maths based, shows mixed-asset portfolios need discussion with an assessment of risk.
All need investors to think about what action to take now…not next year or the next 5 years…the holes are still there and it’s important to take ownership and responsibility rather than hoping it will be OK.