The Diversification Delusion | The Risk that Leaves Both Stocks and Bonds Exposed

In this episode, Jack and Matt revisit one of the most debated topics in investing: the fate of the classic 60/40 portfolio. Drawing on insights from some of the smartest minds in finance—Bob Elliott, Adam Butler, Warren Pies, Rick Ferri, Jared Dillian, Andrew Beer, and Cliff Asness—they explore whether the traditional stock/bond mix still makes sense in today's environment or if investors need to rethink diversification, risk, and portfolio construction entirely. With perspectives ranging from strong defenses of simplicity to sophisticated alternative strategies, this episode is a deep dive into what investors should consider in building resilient portfolios going forward.

Topics Covered:

Why the 60/40 portfolio worked—and why it might not anymore

The impact of inflation, liquidity, and regime change on asset allocation

Risk parity and quadrant-based frameworks for understanding market environments

The argument for real assets: real estate and commodities

An overview of the Awesome Portfolio and its performance profile

The rise of managed futures and how they improve diversification

The psychology of investing in alternatives (and sticking with them)

Rebalancing and the importance of sizing when adding alternatives

Cliff Asness on high-volatility alternatives and long-term risk-taking

How to think through alternatives as your portfolio grows