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60:40 or 30:30:30
https://g.co/gemini/share/d7caafc5506f
two fundamentally different portfolio construction philosophies. The first is the traditional 60/40 portfolio, a model of diversification rooted in Modern Portfolio Theory that combines equities for growth and bonds for income and stability. For decades, this has been the bedrock of prudent asset allocation. The second is a proposed alternative, the 30/30/30 portfolio, which allocates 30% to U.S. equities (VTI), 30% to gold (GLD), and 30% to Bitcoin (BTC). This analysis frames the comparison not as a direct recommendation, but as an examination of a "shifting vantage of investing," reflecting a potential paradigm shift in macroeconomic conditions and investor priorities.
The core finding of this report is that these two portfolios are not merely different arrangements of assets; they represent divergent worldviews on risk, diversification, and the future of the global financial system. The 60/40 portfolio is a product of a multi-decade disinflationary, falling-rate environment where financial assets thrived and the negative correlation between stocks and bonds provided a reliable hedge. It is a model designed to optimize risk-adjusted returns within the existing financial architecture. Its primary vulnerability is a regime change toward persistent inflation and rising rates, an environment where its core diversification mechanism breaks down, as witnessed in 2022.
In contrast, the 30/30/30 portfolio is constructed as an explicit response to the perceived failures of the traditional model in such a new regime. It systematically replaces the interest-rate-sensitive bond component with assets whose investment theses are predicated on scarcity and resilience to currency debasement: physical gold and digital Bitcoin. This portfolio redefines diversification away from a simple balancing of financial claims (stocks vs. bonds) and toward a broader diversification across distinct socio-economic systems: the corporate economy (VTI), the non-sovereign monetary system (GLD), and the nascent decentralized digital economy (BTC).
This strategic shift, however, comes with a stark set of trade-offs. The proposed portfolio offers the potential for superior inflation hedging and higher absolute returns, driven by the inclusion of Bitcoin. Yet, it does so at the cost of introducing extreme volatility. The 30% allocation to Bitcoin is a radical departure from empirically optimized models, which suggest allocations in the low single digits to enhance risk-adjusted returns. Such a heavy weighting transforms the portfolio from a tool of risk management into one of high-conviction speculation, prioritizing the potential for outsized gains over the mitigation of catastrophic drawdowns.
Ultimately, the determination of which portfolio is "better" is contingent on an investor's forward-looking macroeconomic assumptions and their fundamental investment philosophy. The 60/40 remains a viable model for managing risk and achieving moderate returns in an environment that resembles the recent past. The 30/30/30 is a high-stakes, high-volatility construction built for a future of fiscal dominance, persistent inflation, and systemic financial uncertainty. The choice between them is less a tactical decision and more a strategic bet on the nature of the economic era to come
Published on 2 months, 3 weeks ago