Thread by @HacGlobalMedia

I'm going to make a falsifiable prediction that will either make me look brilliant or destroy my credibility:
The traditional 60/40 portfolio will experience a 25%+ drawdown before the end of 2027.
Here's my exact reasoning: 🧵

First, what counts as "traditional 60/40"?
60% U.S. stocks (S&P 500 or similar)
40% U.S. investment-grade bonds (10yr+ duration)
Rebalanced quarterly
This is the benchmark for $18 trillion in assets.

The setup is already in place:
Current environment:
S&P at ~6,000 (elevated valuations)
10-year yields at 4.5%
Stock-bond correlation at +0.33
Inflation running 3%+ (above target)
Fiscal deficits $1T+ annually
We're one catalyst away from crisis.

Catalyst scenario 1: The fiscal crisis
Treasury yields spike above 6% as buyers strike.
Stocks fall 20%+ (valuation compression + growth fears)
Bonds fall 15%+ (yield spike = price collapse)
Total portfolio drawdown: 28%
Probability: 35%

Catalyst scenario 2: Stagflation shock
Simultaneous inflation spike (5%+) and recession.
Stocks fall 25% (earnings collapse)
Bonds fall 10% (inflation fears dominate)
Total portfolio drawdown: 19%
Probability: 25%
Newsletter with full scenario analysis: []open.substack.com/pub/hacheimsch…

Catalyst scenario 3: The policy error
Fed cuts rates to fight recession, but inflation resurges.
Markets lose faith in central bank credibility.
Both stocks and bonds sell off on loss of nominal anchor.
Probability: 15%

Why 70% confidence overall?
Because I need only ONE of multiple possible catalysts to trigger.
The system is fragile. Multiple paths lead to the same outcome.
And importantly: there's no obvious rescue mechanism like in past crises.

What would prevent this?
Inflation magically drops to 2% and stays there
Fiscal discipline emerges (😂)
Foreign central banks resume buying Treasuries
Productivity boom solves everything
These aren't impossible. Just improbable.

The timeline: 24 months.
Why? Because fiscal pressures compound.
2025 debt ceiling fight + slowing growth + sustained inflation = perfect storm.
Or early 2027 recession forces policy mistakes.

I'll track this prediction publicly.
If I'm wrong by January 2028, I'll write a detailed post-mortem on what I missed.
If I'm right, I'll explain how to position for the aftermath.
Bookmark this thread.
What's YOUR prediction for 60/40 performance through 2027? 👇

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