Balanced stress

Balanced portfolios, the backbone of the Weatlh management industry, are having a very bad year. Over the last 33 years, only during the #gfc the results were worse than in 2022. At the time, in 2008, balanced portfolios fell on average 20% and the #fed and #uscongress acted to avoid a depression. We’re now at -12% for 60/40 portfolios, and the #federalreserve seems to be more focused on fighting inflation than rescuing the markets. It is uncertain at what level of pain, us authorities will reconsider their current actions, but by historical standards, we may not be too far from an inflexion point: if the fed doesn’t change course, investors and portfolio managers will capitulate.

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Source: Morgan Stanley