The "death of the 60/40 portfolio" is mostly vibes
2022 was awful, and a thousand finance op-eds wrote the obituary. Four years later, the patient is annoyingly alive and quietly compounding.
Quick recap, because four years is a long time in market-narrative years. The "60/40 portfolio" is the most boring, most studied, most owned asset mix in personal finance: 60% stocks, 40% bonds. The pitch was never that it would beat 100% stocks. The pitch was that when stocks had a bad year, the bonds would be your seatbelt, and you'd lose less.
Then 2022 happened. Stocks fell 18%. Bonds fell 13%. The seatbelt did not work. A 60/40 portfolio had its worst year since 1937. Every financial publication on the planet ran the same headline: The 60/40 is dead.
Four years on, we'd like to push back. Politely. With math.
What actually broke in 2022
The thing that broke wasn't the 60/40 concept. The thing that broke was the specific assumption that stocks and bonds always move in opposite directions. They had — for most of the previous 25 years. So when inflation surprised everyone and the Fed hiked rates faster than at any point in modern history, both asset classes got crushed at the same time. The correlation went from "diversifying" to "highly correlated, in the worst direction."
But this is the part the obituaries skipped: that wasn't unprecedented. It was just rare. In the 1970s, when inflation was the dominant macro story, stocks and bonds also moved together — bad together, sometimes good together. The 25-year run where they reliably zigged when stocks zagged was the historical anomaly, not the norm.
The plain-English bit
"Correlation" just means how much two things move together. If stocks and bonds have negative correlation, the bonds help when the stocks hurt. If they have positive correlation, they don't. The relationship isn't a law of physics — it depends on what's driving markets. When growth is the story, they diverge. When inflation is the story, they often don't.
What happened next: math edition
Here's the part the obituary writers conveniently stopped writing about. After a bad year, 60/40 has historically had a really good next-three-years. Why? Because the bond yield went up. After 2022, a 10-year Treasury yielded ~4% instead of ~1.5%. The bond half of the portfolio became more useful, not less.
| Period (illustrative, total return) | 60% S&P / 40% Agg | 100% S&P |
|---|---|---|
| 2022 | −16.0% | −18.1% |
| 2023 | +17.7% | +26.3% |
| 2024 | +15.0% | +23.3% |
| 2025 | +12.5% | +18.0% |
| 4-yr annualized | +6.5% | +10.4% |
Yes — 100% stocks beat 60/40 since the bottom. They should, in a strong recovery. But the test of 60/40 was never "does it beat stocks in a bull market." It's "does it produce decent returns with much less stomach-churn." It did and it does.
What the obituary actually got right
I'll concede this: the specific bond exposure inside the average 60/40 — long-duration US Treasuries plus investment-grade corporates — is more interest-rate sensitive than most people realized. There's a real argument for a modernized version: a chunk of TIPS for inflation protection, a sleeve of short-duration bonds for the rates-up scenario, maybe a small alternative-asset position.
Some firms now market this as "the 50/30/20" or "the all-weather portfolio." Fine. Call it whatever sells. The principle — diversify across asset classes that react differently to different regimes — is the same idea 60/40 was always trying to be.
The boring point
The 60/40 portfolio's job was never to deliver the best return. It was to deliver a return most people would actually stick with, through bad years. By that metric — investor behavior — it's been one of the most successful financial products ever invented.
So who killed the 60/40?
Mostly people selling something else. "The 60/40 is dead" is a remarkably effective opening line for a pitch deck. It justifies higher fees, more complex products, and alternative-asset allocations that conveniently pay the salesperson more. We're not saying every "modern portfolio" pitch is cynical — some of them are genuinely improvements. But pattern-match: the obituary almost always precedes a sales call.
A portfolio whose "death" requires a four-year follow-up correction is doing better than its press.
So what should you do?
If you have a 60/40-ish portfolio you've held through this entire cycle, congratulations — you have done objectively well, and the fact that 100% stocks beat you doesn't mean you were wrong, it means you were a normal human being with normal risk tolerance who got to sleep at night during 2022. Keep going.
If you're building a new portfolio, you don't have to call it "60/40" to use the principle. A target-date fund — which is just an automatic age-adjusted stock/bond mix — is essentially the same idea, executed for you for nearly free. Pick the year you'd retire, buy that one, ignore the headlines.
The funeral was premature. As is, frankly, most market commentary about most things. The boring, dead portfolio is in your 401(k), quietly doing exactly what it was designed to do.
Disclosure: Members of the Money Market desk hold target-date funds inside retirement accounts; these contain US and international stocks plus various bond exposures. The return figures in this piece are illustrative and approximately track real index returns for those years; for exact figures, check Morningstar or the funds' own annual reports.