Finance
Gold record run leads to latest sell signal on classic 60/40 portfolio
The traditional 60/40 portfolio has been under attack for years, and the recent hot trades in precious metals and cryptocurrencies are leading it to lose a little more of its prominence. Multiple strategists and investors are pivoting toward a 60/20/20 market portfolio: with the 60% in stocks unchanged, but fixed income losing half of its former hold over investor money, and 20% carved out for alternatives like gold and bitcoin.
Stocks and bonds are moving in the same direction too often, they say, while inflation, geopolitical risk, and government spending and high debt loads mean bonds no longer offer the protection they once did. “We are seeing greater adoption of non-equity, non fixed-income products,” Todd Rosenbluth, head of research at VettaFi, told CNBC.
In this new approach to structuring market exposure, gold is not a hedge on the margins of a portfolio, but one of its core holdings. Gold recently reached a record high above $4,300. Gold is up over 60% since the beginning of the year, which is backed by central bank demand, de-dollarization, and geopolitical tensions, and what has been called “the debasement trade.”
“What’s really happening now is a shift into the acceptance of gold,” Steve Schoffstall, director of ETF product management at precious metals and critical materials investing company Sprott, said on CNBC’s “ETF Edge” earlier this week. Typically, he said, it’s been viewed as a “fringe” allocation tool, “but what we’re really staring to see now is more prominent economists suggest shifting from 60-40 to something closer to 60-20-20,” he added.
But Schoffstall also said that for “most people, we feel they are probably well positioned if they have a 5%-15% allocation to physical gold.”
Gold ETFs have skyrocketed in performance and investor appeal, with the SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) up around 11% this month, but the flood of investor assets into gold funds extends back to earlier this year. Gold ETFs posted their largest monthly inflows ever in September, according to the World Gold Council, with close to $11 billion in the month. SPDR Gold Shares took in over $4 billion alone last month, and mid-October, has amassed another $1.3 billion from investors, according to ETFAction.com. Sprott says the total assets moved by investors into gold funds this year has surpassed $38 billion.
Performance of the SPDR Gold Shares ETF and iShares Bitcoin Trust in 2025.
Some investors are allocating to cryptocurrency, specifically bitcoin, with a similar 20% approach. Some financial advisors have gone beyond even that level, saying up to 40% in cryptocurrency is defensible as an investing approach.
Bitcoin reached a record high of $126,000 on Oct. 6 and has seen a flood of new money this month, with iShares Bitcoin Trust ETF (IBIT) taking in close to $1 billion in a single day, and over $4 billion at the mid-month October mark.
Rosenbluth said the alternatives bucket is no longer a single bet, but a mix of commodities, crypto, and private credit that are all packaged in ETFs, but investors do need to understand the bets have significant differences. “Gold is more risk off … cryptocurrency is more risk on,” Rosenbluth said.
Silver has also gained more attention among investors, and unlike gold, silver is a play on multiple global economic trends, including industrial demand, electrification, and automation. Prices recently climbed to a record high of $53.59 per ounce and some analysts expect it to trend much higher. “Silver is very vast in its uses about 10,000 uses,” Schoffstall said.
Rosenbluth warns amid the current record run for precious metals and crypto that this should not be about investors chasing the highest return in the short-term. While this has been a period of time when these alternatives increased overall portfolio returns, there’s no guarantee that will always be the case. The primary reason to restructure a portfolio with hedges, Rosenbluth said, is to add levers that operate differently during periods of ups and downs in the stock and bond markets, and that can help to smooth out returns over time.
This week was a good example of how these assets, considered popular hedges, can have very different market dynamics. After hitting its record above $126,000 earlier this month, bitcoin has sold off sharply, with a weekly loss of over 8%, as of Friday morning, while gold and silver have continued to move up and remain on pace for weekly gains. Private credit, meanwhile, which has ballooned in recent years but also sparked fears it might be brewing a bubble, became a major concern of the market over the past week since the surprise bankruptcy of auto parts company First Brands.
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For the generation that should be in its “peak savings years,” the prospect of retiring on time has shifted from a plan to a prayer.
A newly released Employee Financial Wellness Survey by PwC found that nearly 50% of Gen X employees are pushing back their retirement dates, citing stagnant wages, rising everyday costs, and a lack of liquid savings.
Additionally, only 38% of Gen Xers believe they can retire when they originally planned, and more than half of this demographic expect to withdraw funds from their retirement accounts early to cover short-term costs.
“For employers, this isn’t a future problem. Financial anxiety during peak career years can affect focus and engagement,” PwC researchers write. “If the risks are clear, the question is why more employees aren’t taking action. It’s not a lack of desire. Most employees want stability, confidence and to feel in control. But many don’t feel equipped to get there.”
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The primary driver of this retirement delay is the inability to save as inflation eats away at monthly expenses, the report notes. Twenty-five percent of the total workforce is living without a buffer, and nearly half cannot meet basic household expenses.
Nearly half of Gen X workers are delaying retirement, PwC reports. (Getty Images)
“[Forty-nine percent] say their compensation isn’t keeping up with costs. As expenses rise faster than income, day-to-day trade-offs are becoming routine. Employees aren’t just feeling squeezed. They’re making difficult financial decisions to stay afloat,” the PwC report continues..
As a result, when Gen Xers cannot afford to leave their current jobs, the entire corporate ladder stalls, creating business risks, with companies facing higher costs as older talent remains on payroll longer than expected.
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“When employees dip into retirement funds early or delay retirement altogether, it affects more than personal finances and retirement plan leakage,” the report says. “It may also influence workforce planning, healthcare costs, succession timing and overall organizational stability.”
The findings also show that a significant portion – 41% – of the workforce feel they were never given the tools to manage a crisis of this magnitude, leading to a sense of being “overwhelmed” by financial choices.
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PwC provided a call to action for employees and their employers, encouraging them to reduce the stigma around financial education, foster trust through human coaches, emphasize skill building and focus on day-to-day finances before long-term goals.
“Employees define financial wellness simply: less stress, fewer surprises and the freedom to make financial choices with confidence. For employers, that’s the opportunity.”
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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