It’s an investing strategy that many trace back almost a century, when a young accountant named Walter Morgan started to become alarmed at the rampant speculation in the booming 1920s stock market.
His solution was what became known as the Wellington Fund, the first “balanced” mutual fund that invested in both stocks and bonds. In the early 1950s, economist Harry Markowitz laid out the math that showed mixing stocks and bonds delivered ideal diversified portfolios for those worried as much about risk as much as return. Eventually the blend of 60% stocks and 40% bonds became close to gospel in the industry, with a wide variety of regular savers and professional investors anchoring retirement plans somewhere around “60/40,” or at least using it as a benchmark against which to compare other strategies.
