Famed 60/40 Stocks-Bonds Portfolio At 14-Month Drawdown, Says Market Strategist: Longest Since Financial Crisis'

Charlie Bilello, Chief Market Strategist at CPI Wealth, pointed out that the famed 60/40 portfolio comprised of U.S. stocks and bonds is currently at a 14-month drawdown.

"A 60/40 Portfolio of U.S. stocks/bonds is currently in a 14-month drawdown, 14% below its all-time high," Bilello tweeted.

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The standard portfolio where an investor puts 60% of their investible sum into equities and 40% in bonds is generally considered a prudent diversification. However, in the current economic environment, the portfolio doesn't seem to be working.

Equity markets have been volatile this year as strong economic data, higher-than-expected inflation and a tight labor market ate into the gains made during January. Federal Reserve officials have been increasingly warning that more needs to be done to reach their 2% target. These factors have also led to rising bond yields.

Price Action: Bilello pointed out that the 2-year Treasury yield moved up to 4.78% — its highest level since July 2007. "A year ago this yield was at 1.54% and two years ago it was at 0.12%," he said.

On a year-to-date basis, the SPDR S&P 500 ETF Trust SPY has gained 4.09% while the Vanguard Total Bond Market Index Fund ETF BND has lost 0.4%.

Bilello also pointed out that the drawdown in the portfolio also stands out when compared over the last decade.

"This is the longest drawdown for a 60/40 portfolio since the financial crisis (37 months) and before that the aftermath of the dot-com bubble (43 months)," he tweeted.

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