"So, in your view, a 60-40 mix of stocks and bonds is too big a bet on equities because stocks historically have been so much riskier than bonds that the degree of risk they add to a portfolio exceeds their weighting in that portfolio. But what are some of the other flaws with that kind of an asset mix?
That's actually the big flaw—the equity weight. And I'll admit this is controversial; some people will disagree, but they are wrong. I am a strong believer that the 60-40 portfolio is not really 60-40 because you don't really care about the weights of where you put your dollars. Instead, you care about the weights of where you can make and lose money. If you put 60% of your assets in something that was 100 times riskier—but with 100 times the expected return of the other 40%—that would be so extreme you could not ignore it. You would say, "I'm really not 60-40, I'm betting all my money on this asset class."
Barron's: The Big Danger: Overreliance on Stocks
