, Columnist
The Pandemic Has Upended Asset Allocation Rules
In a zero-rate world, the trade-off between a return on your money and a return of your money has become even more tricky.
A crisis changes things.
Photographer: Nelson Almeida/AFP
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Asset allocation, like morals or diet, is a sphere where simple edicts often help guide better decision-making.
The goal is to rent out money at the best yield possible while still getting repaid. Pre-pandemic, my starting point was to hold a mix of global stocks, long-duration Treasuries and real estate in roughly equal amounts. This allocation assumed stocks, bonds and real estate would outperform cash over time, that bonds would provide portfolio protection in an economic downturn, and that real estate would be a decent inflation hedge.