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It is a challenging environment for investors. The classic 60/40 portfolio needs to be questioned when the 10-year US Treasury's price return asymmetry looks like this:
If 10-year interest rates go to zero: +7.5% in price
If 10-year interest rates go to 3%: -19% in price
With both bonds and equities expensive, Nancy Davis expects lower returns and larger and more frequent drawdowns for 60/40 portfolios. From current yield levels, bonds are unlikely to buffer equity losses as well as in the past making 60/40 portfolios riskier.