In this video, Bob Prince, CIO of Bridgewater Associates, discusses the impact that zero interest rates are having on the traditional 60/40 portfolio mix between equities and bonds. Right now, we have an ‘A-symmetrical’ risk profile on bonds; i.e. bonds have very limited upside while at the same time have unlimited downside risk. Bonds have traditionally played a role as a store-hold of wealth, but now bonds are being substituted for gold and because of excess of liquidity, money is flowing into high performing equity assets. Bob points out that throughout history, gold has performed well in both inflationary and deflationary environments. It may be time to review the makeup of your portfolio.
Article by John Mulvey