Trends with Benefits #106: The Shift From a 2% to a 5% World and the 60/40 Portfolio with Jared Woodard

Jared Woodard, Head of the Research Investment Committee at BofA Securities, joins me on this week's episode. We discuss how the United States is experiencing one of the lowest levels of productivity growth, how artificial intelligence may solve this, and how the popularity around AI is leading some companies to “AI-wash” their earnings reports. Next, we dive into how the recent improvement in inflation may impact corporate profit margins and how demographics affect economic growth. This ties into the transition from a 2% world, which we’ve been in the past few decades, to a 5% world, where the long-term average for variables like interest rates, inflation, and the cost of capital is closer to 5%. Lastly, Jared explains how this shift requires investors to rethink the 60/40 portfolio.

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The Shift From a 2% to a 5% World and the 60/40 Portfolio with Jared Woodard

Show Notes:

00:42 Will artificial intelligence drive productivity?

09:14 Economic outlook

13:30 Shift from 2% to 5% world

17:55 Views on the 60/40 portfolio

30:24 Long-term trend

32:46 Trend or fad

Trend or Fad

Listen for Jared’s take on cryptocurrency, labor strikes, defense spending, buffer ETFs, and speedos.

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