(24 January 2023, AFR, p27, Arian Neiron Contributor)
There has been a lot of discussion recently about the so-called “60/40 portfolio”. Mind you, thousands of traders and investors do not follow such strategies – myself included.
However, this news article is interesting reading because of the various references to the opinions of portfolio construction, including: Modern Market Theory, Harry Markowitz, Benjamin Graham and David Swensen from Yale
But, for me, the most interesting reference was from the Future Fund’s December 2022 paper, “The Death of Traditional Portfolio Construction”, including the following text.
“Traditional approaches have delivered strongly, but it is doubtful they are fit for purpose in the future. As the outlook for traditional beta has declined and the toolkit for defending portfolio returns has shrunk, institutional investors need to reconsider what they invest in, where they invest, and how they make decisions.”
So, those of us who use Technical Analysis, and use Trend Following or Momentum strategies, we can press on with greater confidence that the mainstream views about long-term buy-and-hold investing strategies are flawed.
Oh, and that Future Fund paper? See it here: https://www.futurefund.gov.au/-/media/Future-Fund—Documents/Position-Papers/Future-Fund-Position-Paper—The-death-of-traditional-portfolio-construction—Dec-2022.ashx