Even taking into account the dotcom bust and market crash following the 1999-2000 cycle, stocks still shone brighter.
The average return of a 100% equity portfolio was 12.75%, an all-bond portfolio returned 9.10%, and a 60/40 portfolio generated 11.09% on average.
Equities returned around 26% in the year after the Fed stopped tightening, bonds between 6-8%, and a 60/40 portfolio around 18%.
Blended together, a 60/40 portfolio generated double-digit returns after five of these six cycles, including 25% in the mid-1990s.
No two economic cycles, Fed reaction functions, inflationary dynamics or asset price dynamics are the same.
Persons:
Joe Kleven, Kleven, Paul Volcker, Shelly Simpson, Simpson, Jamie McGeever, Andrea Ricci
Organizations:
Fed, Nasdaq, NYSE, Mega Tech, ICE, Treasury, Reuters, Thomson
Locations:
ORLANDO, Florida