Did the 60/40 Portfolio Really Break? The Data
The 60/40 portfolio, year by year
| Year | Approx. 60/40 return | Stock-bond correlation |
|---|---|---|
| 2022 | -16% to -17.5% | Spiked to roughly +0.75-0.80 (historically -0.25 to +0.25) |
| 2023 | +17.2% | Began normalizing |
| 2024 | ~+15% | Correlation still elevated, peaked near 0.80 mid-year |
| 2025 | ~+15% | Fell to roughly +0.16 by late in the year |
2022 figures and correlation data compiled from CNBC’s October 2022 reporting and subsequent industry analysis; 2023-2025 figures and the correlation recovery from State Street’s October 2025 market commentary and Morningstar’s ongoing 60/40 coverage (see Sources below). Exact figures vary slightly by the specific stock/bond index blend used.
What actually broke in 2022
The 60/40 portfolio’s entire premise is that stocks and bonds usually move somewhat independently – when stocks fall in a typical recession-driven selloff, investors often rotate into bonds, pushing bond prices up and cushioning the blow. 2022 was a different kind of shock: inflation surged well above the Federal Reserve’s 2% target, and the Fed responded with the fastest pace of interest-rate increases in decades. Rising rates mechanically push existing bond prices down (newer bonds paying higher rates make older, lower-rate bonds less valuable) while simultaneously pressuring stock valuations – so both fell together. That pushed the 12-month stock-bond correlation up to roughly 0.75-0.80, a level not seen since the high-inflation stretch from 1970 to the late 1990s, compared with its more typical range of -0.25 to +0.25.
Has it recovered? Yes – substantially
The recovery has been sharp, not gradual. The portfolio returned about 17.2% in 2023, more than double its long-run historical average of roughly 7-8% a year, and followed that with approximately 15% in both 2024 and 2025. Just as importantly, the stock-bond correlation that broke the diversification benefit in 2022 has itself been normalizing – after peaking near 0.80 in mid-2024, it had fallen to roughly 0.16 by late 2025, evidence that bonds are starting to act like a shock absorber again rather than moving in lockstep with stocks.
Does adding gold actually fix this problem?
Gold has a real, historically documented role as a diversifier specifically against inflation-and-rate shocks like 2022 – but it is not a universal fix, and pitches that treat it as one skip an inconvenient data point: gold itself fell approximately 28% in 2013, its worst year since 1981, when the Fed signaled it would begin tapering its bond-buying program. That was a different kind of shock than 2022’s, and gold did not protect against it. The honest takeaway from the data is that no single asset class – stocks, bonds, or gold – reliably offsets every kind of shock; genuine diversification means understanding which assets tend to help in which specific scenarios, not assuming any one of them is a universal hedge.
Red flag to watch for
Be skeptical of any pitch that uses “the 60/40 is dead” as the entire justification for moving a large share of a retirement account into a single asset like gold. The real 2023-2025 data shows the classic portfolio recovered strongly, and gold has its own history of double-digit annual drops. A properly diversified portfolio, not a full reallocation into any one asset, is what actually addresses the correlation risk 2022 exposed.
Curious how gold has actually performed in past downturns? See our Gold in Past Market Crashes guide →
Frequently Asked Questions
Did the 60/40 portfolio really “break” in 2022?
For that one year, yes – it lost roughly 16-17.5%, its worst showing in decades, because stocks and bonds fell together. It was not permanently broken; it returned about 17.2% in 2023 and roughly 15% in 2024 and 2025.
What actually caused stocks and bonds to fall together in 2022?
An inflation shock plus the fastest Fed rate-hiking cycle in decades, which pressures both bond prices and stock valuations at the same time – pushing their correlation up to roughly 0.75-0.80, far above the historical -0.25 to +0.25 range.
Has the 60/40 portfolio recovered since 2022?
Yes – about 17.2% in 2023 and roughly 15% in both 2024 and 2025, with the stock-bond correlation falling back to around 0.16 by late 2025.
Does adding gold reliably fix the 60/40 portfolio’s diversification problem?
Not universally. Gold has helped in inflation-and-rate shocks like 2022, but it fell about 28% in 2013 during a different kind of shock, so it isn’t a guaranteed hedge in every environment.
- CNBC, “Why 60/40 portfolio is on track for its ‘worst year ever,’ says CIO” (October 2022) – cnbc.com/2022/10/03/why-60-40-portfolio-is-on-track-for-its-worst-year-ever-says-cio – 2022 performance and stock-bond correlation spike.
- State Street Global Advisors, “60/40 strategy regains strength” (October 2025) – ssga.com/us/en/institutional/insights/mind-on-the-market-03-october-2025 – 2023-2025 recovery figures and correlation normalization.
- Morningstar, “150 Years of Stock and Bond Market Crashes: How the 60/40 Portfolio Held Up” – morningstar.com/economy/6040-portfolio-150-year-markets-stress-test – long-run historical context.
- CNBC, “Gold: the not-so precious metal of 2013” – cnbc.com/2013/12/06/gold-the-not-so-precious-metal-of-2013 – gold’s 2013 decline and its cause.
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