A 60:40 portfolio has an effective duration of ~40 years, where most of that duration comes from equities.
I’m not really sure how you get that? The duration on the bond portion is going to be ~7-10y which would imply 60y duration for equities, which I think is wrong.
My understanding is that an important part of the reasoning for a focus on avoiding bonds is that an increase in GDP growth driven by AI is clearly negative for bonds, but has an ambiguous effect on equities (plus commodities and real estate), so overall you should hold more equities (/growth assets) and less bonds. Is that right?
That is their claim, but as I pointed out here the evidence isn’t so clear.
I’m not really sure how you get that? The duration on the bond portion is going to be ~7-10y which would imply 60y duration for equities, which I think is wrong.
That is their claim, but as I pointed out here the evidence isn’t so clear.
I think the effective duration on equities is roughly the inverse of the dividend yield + net buybacks, so with a ~2% yield, that’s ~50 years.
Some more here: https://www.hussmanfunds.com/wmc/wmc040223.htm
I don’t think that makes much sense tbh.
I think the key point is just equities will also go down if real interest rates rise (all else equal) and plausibly by more than a 20 year bond.
I agree, although I’ll give you good odds the 20y moves more.