Home » Annus horribilis for the 60/40 strategy: here are the possible counter-moves in view of a tortuous 2023

Annus horribilis for the 60/40 strategy: here are the possible counter-moves in view of a tortuous 2023

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Annus horribilis for the 60/40 strategy: here are the possible counter-moves in view of a tortuous 2023

Soon we will also archive the result of the US mid-term electionswhere the consensus expects a bad result for President Biden.

The month of October is about to be closed without particular jolts with bears and bulls in balance and the market can continue to move in the trading range for the next 30/40 days. Like this Michele De MichelisInvestment Manager of Frame Asset Managementwho fears it is too early to see a year-end rally, unless we see surprising quarterly results.

A recently published statistic reports that so far 2022 has turned out to be the worst year in the last hundred for a balanced portfolio (60% SP 500 and 40% T bond). “Therefore, I am not surprised to see daily increases of even 2/3 points precisely because they are typical phenomena of bearish markets” says De Michelis who explains why we still continue to advise to proceed with caution. “Our forecasts at the moment are not that great even for 2023, since we may have entered a structural bear market, which, unlike cyclical markets, tend to be more persistent and deep. However, since it is always extremely difficult to identify the bottom of a movement, we believe that it is a good strategy to assign a maximum weight to the equity part of the portfolio by accumulating it over the next twelve months ”.

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