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Chart of the Day: Don't Simply Set and Forget

Samuel A. Kiburz Feb 1, 2023
Chart shows the ratio of stocks and bonds to receive a 6.5% yield across various years


Today’s Chart of the Day comes from an article in the Wall Street Journal, “Bonds Over Stocks: The New 60-40 Portfolio.” There are a lot of nuisances in charts like these, and I have to ask, “What type of bonds and stocks do you have to get to this 6.50% yield touted in the article?” This is especially true because a portfolio of all the publicly held stocks and bonds only have a yield of 1.65% and 4.30%, respectively, and when combined with their suggested 40% stocks/60% bonds, it only works out to a yield of 3.25%.

Alas, further research shows their example includes junk and long-term bonds, high-yield low-growth stocks, and private equity into the mix. All of these can add significant risk for an average investor’s portfolio.

The chart does show, however, you cannot simply “set and forget” your allocations due to changing market conditions.

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