The Thinking  /  The Ledger  /  Reading 08
08 Financial × Risk #

The 60/40 portfolio is no longer valid — it was never universal, and the regime that supported it has turned.

Market pre-2022 2022-on What it means
US −0.34 +0.08 inverted hard — bonds now fall with equities
UK −0.17 +0.14 inverted hard
Germany −0.27 ~0.00 hedge neutralised
Japan −0.09 −0.02 no hedge to lose (rates pinned near zero)
India +0.02 +0.15 never a 60/40-style hedge

63-day rolling stock–bond correlation. Negative = bonds cushion equities, the 60/40 promise.

The reading — and its limits The hedge inverted hard where it was deepest (US, UK) when the 2022 hiking cycle hit; it was neutralised in Germany and never existed in Japan or India. A correlation that “always held” turns out to have been a feature of one rate regime in a few markets — not a universal law. Bond legs are long-government-bond fund proxies, not cash bonds.

Method 63-day rolling correlation of daily equity-index vs long-government-bond returns, per market, pre-2022 vs 2022-on, computed from primary price series (same method as the US base reading).

Computed 22 June 2026

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