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2025-09-17 18:04:23
[Gold Takes the Lead! Morgan Stanley CIO Bullish on the New "Inflation-Proof" Trinity] ⑴ Morgan Stanley Chief Investment Officer Mike Wilson proposed a more resilient 60/20/20 portfolio strategy, including a 20% allocation to gold. With the potential yield of US stocks relative to US Treasuries at historically low levels and investors demanding higher yields from long-term bonds, this strategy is seen as an effective inflation hedge. ⑵ A traditional 60/40 portfolio typically allocates 60% of assets to stocks and 40% to fixed income. The logic is that stocks rise during periods of economic optimism, while bonds rise during periods of turmoil, offsetting each other. However, Wilson prefers a 60% allocation to stocks, with the remaining 20% divided between fixed income and gold. Within the fixed income market, this renowned Wall Street bear prefers short-term US Treasuries with a maturity of five years over ten-year bonds to better capture the yield curve's rolling returns. ⑶ Wilson noted that gold, rather than US Treasuries, has become the "anti-fragile" asset. He believes that high-quality stocks and gold are the best hedges. The advantage of this dual hedge lies in their stark contrast: both hedge against inflation, but stocks are growth-linked, making them risk-on investments, while gold rises as a safe haven during economic downturns when real interest rates fall. (4) US stocks have rebounded from near-bear market lows following Trump's tariff remarks. The S&P 500 and Nasdaq Composite hit several new highs in September, a historically weak month for stocks. Meanwhile, spot gold prices have soared to over $3,700 per ounce, a record high, fueled by growing expectations of a Federal Reserve rate cut this week. Wilson said the April lows would be excellent buying points for many stocks, and some of the sectors that have suffered the most losses have since rebounded significantly, demonstrating the return of excess returns since Trump's tariff remarks. (5) On the other hand, fund managers have warned that the appeal of long-term bonds is waning due to growing doubts about the Federal Reserve's independence.
