Wealth Outlook 2024 - Slow then grow

36 Wealth Outlook 2024 | Portfolio views Core portfolios could be ready to shine FIGURE 1 Returns for US large caps, 10-Year US Treasury bonds and the 60/40 stock/bond allocation during years when bonds and equities fell in tandem (and consequent one- and two-year forward return for the 60/40 allocation) US large cap 10-Year 60%US large cap 1-Year forward 2-Year forward Year total return total return 40% 10-year US 60/40 return 60/40 return YoY % change YoY % change Treasury 1931 -43.9 -2.6 -27.3 -1.8 28.0 1969 -8.5 -5.6 -7.3 10.0 24.2 2022* -18.1 -17.0 -17.7 4.6 Source: CGW Global Asset Allocation and Quantitative Research Team, Global Financial Data (GFD). S&P 500 TR is used for US Large Cap index and US 10-Year Govt. Bond TR (Provider: GFD) is used for the 10-Year Total Return. The historical allocation levels use indices and are provided for informational purposes only. The historical index allocation levels should not be taken as an indication of future performance, which may be better or worse than the levels set forth above. The index returns shown do not represent the results of actual trading of investor assets. The indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is not necessarily indicative of future returns. Real results may vary . * For 2022 line, 1-Year Forward 60/40 return is YTD performance as of October 31, 2023. and vice versa. But in 2022, stocks and bonds sold off. That’s just the third time in the last century this has happened. The previous times that both sides of the classic “60/40” stock/bond allocation sold off were in 1931 and 1969 ( FIGURE 1 ). Two years later, entering 1934 and 1972, core allocations had risen by more than 20%. While no one knows how we will enter 2025 after a dismal 2022, the opportunities for both equities and bonds appear ahead of us as we write Wealth Outlook 2024. The pandemic was an aberration The pandemic was one of the most disruptive events in human history yet was accompanied by one of the strongest bull markets on record. While this was cheered at the time, it created massive price distortions across major asset classes. With interest rates persisting at zero and extensive interventions by governments and central banks, the valuations and relationships between securities