Lead-Lag Live Breaking the 60/40 Myth with Philip Toews
Jun 8, 2025
Phillip Toews, founder of Toews Asset Management and author of "The Behavioral Portfolio," unveils the pitfalls of the traditional 60/40 investment strategy. He examines historical market failures, revealing how this approach could have led to severe losses during economic downturns. Toews highlights the concept of 'adaptive fixed income' and critiques current monetary policies, suggesting new pathways to protect wealth. He introduces 'hedged equity' strategies, promoting portfolios that prioritize investor psychology and long-term stability, while also addressing the dangers of 'corona bias' in financial decision-making.
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Redefining Portfolio Success
- Traditional balanced portfolios fail profoundly during severe crises like the Great Depression, losing up to 72%.
- Starting portfolio design from behavioral and economic investor needs prevents catastrophic losses and supports client retention.
Adaptive Fixed Income Explained
- Historical bond bear markets can last decades, with the 1945-1981 period resulting in a 21% real loss.
- Adaptive fixed income strategies move beyond core bonds to reduce principal loss risk during rising interest rate periods.
Rethinking Bond Market Risks
- Current bond market risks may stem more from global currency debasement than traditional rising interest rates.
- High sovereign debt worldwide creates an environment vulnerable to inflation driven by currency devaluation.
