Why Pre-Merger SPACs May Offer A Fix To The Broken 60/40 Model
We’ve been discussing the broken 60/40 Model for a few years now. It’s not that we have anything against bonds—I’ve been a bond manager for 37 years—it’s simply because bond yields are at a level where they are mathematically incapable of providing a principal protection cushion should rates rise, a meaningful yield advantage over stocks, or a negative correlation with stocks. Let’s examine why it worked so well for 40 years; why it hasn’t worked so well since the great financial crisis, why it can’t work now; and, how to fix it:
