Part 3/10:
Why Is the 60/40 Rule Being Challenged?
Larry Fink, CEO of BlackRock, has publicly challenged the 60/40 rule, suggesting a shift in allocation from 60% stocks and 40% bonds to a more diversified mix: 50% stocks, 30% bonds, and 20% in private assets like real estate. His concern stems from the observation that the traditional diversification principle no longer holds in certain recent market environments.
The core issue is that bonds and stocks no longer consistently move inversely as expected. For instance, during specific periods, both asset classes declined simultaneously—an anomaly that undermines the assumption that bonds will always serve as a safe haven when stocks falter.