ITPM Flash Ep24 – is a video series from the Institute of Trading and Portfolio Management (ITPM), founded by Anton Kreil, that provides market insights from the Institute’s senior trading mentors.

ITPM Flash Ep24 – Summary

In this video, Jason McDonald discusses the traditional 60/40 portfolio strategy, which has been a staple for investors over the past 40 to 50 years. The strategy involves allocating 60% to equities and 40% to bonds, providing a balanced approach for both good and bad economic times.

Key Takeaways:

  • Historical Success: The 60/40 portfolio has historically performed well, especially during market stress. The balance between equities and bonds helped dampen overall portfolio volatility, contributing to its success.
  • Disinflationary Tailwinds: The strategy’s success was largely influenced by 40 years of disinflationary forces, such as demographic shifts, China’s emergence, and globalization. These factors led to falling interest rates, benefiting both bond and equity markets.
  • Changing Landscape: Jason raises questions aboutwhether we are entering a regime change. Factors like rising inflation, increased defense spending, and geopolitical tensions could signal a shift in the investment landscape.
  • Inflation Concerns: Current events, including the Russia-Ukraine conflict and global political tensions, raise concerns about inflation. Rising defense spending and the reversal of globalization may impact the traditional drivers of disinflation.
  • Government Intervention: Jason notes a trend toward bigger government, impacting bond yields. With significant government deficits and proposed budgets reaching unprecedented levels, there are concerns about the need for higher bond yields to discipline fiscal spending.
  • Election Year Dynamics: The upcoming election year in 2024, representing a large portion of global markets, adds complexity to addressing fiscal discipline. Political incentives may influence decision-making, impacting market dynamics.
  • Unprecedented Times: A long-term chart reveals that current US government spending as a percentage of GDP is at 44%, exceeding levels seen during the Global Financial Crisis and rivaling World War II. Jasonsuggests these unprecedented times may offer unique trading opportunities.

ITPM Flash Ep24 – Conclusion

As we navigate through potentially transformative times in the financial markets, the traditional 60/40 portfolio strategy faces challenges. Investors are urged to stay vigilant, considering factors like inflation, geopolitical tensions, and government interventions that could reshape the investment landscape. Adapting strategies to evolving market conditions may be crucial in seizing potential trading opportunities.

Disclaimer

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About me

The Institute of Trading and Portfolio Management (ITPM), founded by ex-Goldman Sachs trader Anton Kreil, helped me on my journey to become a profitable retail trader

Review of ITPM Courses

The courses of the Institute of Trading and Portfolio Management helped me massively to become a profitable retail trader. I genuinely believe that ITPM provides the best trading education on the market – but not everything is perfect. Find out more in my reviews

Results of my Mentoring with Anton Kreil

In September 2022 Anton Kreil asked me and another one of his former mentees, if we want to do a webinar with him. After the Thailand class in April 2022 and the following mentoring with Anton from Mai to July 2022 I thought it was great opportunity to show what I have learned and how I have progressed

ITPM Thailand Mentoring

After completing my first ITPM Course, the PTM 1.0 (the predecessor of the PTM 2.0), I knew I want to do a mentoring. After a thorough analysis I decided to attended the April 2022 Thailand mentoring class

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