wanting 15 paid sick days and they can only avert a rail strike if congress gets involved and congress demands that the rail workers accept the deal or calls for a cooling off period where negotiations continue. we'll be following it. there's another big show in the work next week and tune in every friday night at 7:00 p.m. eastern. start smart here on fox business every weekday from 6 to 9:00 a.m. eastern for mornings with maria and hope you start your day every weekday with us here on fox business. that's if for us this weekend. hope you had a wonderful thanksgiving and i'll see you again next time. ♪ jack: welcome to a special edition of baron's round table.

it's been a difficult year and red hot inflation challenging even the most seasoned investors and we're taking the big money questions on everyone's minds. first we're breaking down the portfolio and does it still work in this environment? then the economy slows and what does that mean for stocks? we'll ask sofi investments. and later time to rethink the major household finances and looking at big ticket expenses for housing, cars and how falling stocks can save you money. plus, we're busting myths about inflation and offering steps to take right now going into the end of the year. on the barron's round table. all my colleagues are here. let's again, carlton, with at traditional 60/40 investment portfolio and classic approach to investing in stocks 60% and bonds 40%. stocks give you the growth and bonds act as a shock absorber

but this model came into question when bond yields were at zero and yields skyrocketed and washington journal reported the 60/40 portfolio on track for worst performance since 1937. that does not mean it's a bad idea. >> right, i mean, you don't want to say the 60/40 portfolio is dead. a lot of people have. jack: google it, it's all over the internet. >> think, when you're building a portfolio, you're doing it for the long term. that means some years everything will work and some years nothing will work and some years there's a bit of this and bit of that and hope you kind of come out ahead. so, yes, we are looking at varicat avery challenging year h the middle of november and 15% roughly on par with a drop in s&p 500 over the same period and bonds entering a bear market and again, it doesn't mean the system is dead. it's just, yes, it's a challenging year and you don't want to minimize that but i want to advise it and didn't want to change drastically. jack: stocks are cheaper and

bonds giving yield, 4.5% or so. >> yeah, that's something that, i mean, over the last 15 years was basically never happening and on the bond side of the portfolio as you point out, you're getting 4% yield and heading into recession their environment, bond portfolios have held up when talking about treasuries, the fight to safety and someone coming in now, you're coming in at a lower point. >> 60/40 right, not for everyone. how do you tell what's the right mix for you? 70/30, what have you? everyone says age. how much should be wealth and what you're using the money for? for context, i'm 85 years old which in the u.s. makes me run for president in 12 years and might need campaign cash. >> for that go into bitcoin. with the 60/40, the thinking was use that kind of bond allocation with your age. if you're 40 years old, 41 bond allocation and think about, okay, what is -- what are your needs.

that's what it's about with portfolio construction and what do you need and when? that's the determining factor of how much in assets do you want to have in riskier adventures versus more conservative ones and buying a house and paying tuition and net worth to handle. >> buying 16 more chain saws on hand for that. jack: ben, start with the 60%. that's your stock portfolio. where do you put it in the stock market? >> the good thing is stocks are so much lower that you really can't go wrong if you start investing in long term right now. i think we're entering the point where we want to be investing in stocks, not sectors and we had a long period where tech stocks outperformed everything or tech adjacent stocks and this year energy was the only thing that went up. but we want to look at individual stocks cause it's going to be the environment with good managers do well and other managers not so well. that means looking for funds that are maybe core funds, not value or growth, but a mix of

everything, things like perhaps the t rope, price dividend growth. that's prdgx or american funds washington mutual, awshx. but an easy way is looking at equal weighted s&p 500 versus s&p 500 which would be rsp. >> i would be remiss to not point out just a simple straight index fund vanguard total market index beaten about 80% of managed funds over the long term. jack, take us to the 40, how do we invest in bonds? >> exciting part you're saving for me, the bonds. jack: before the cup of coffee. >> 4% thereabouts on treasury and maybe 5% on them and there's always some kind of investment sales saying you can do better on preferred stocks or better on this or that or junk bonds, this or that asset class and this portion of the portfolio is keeping your money safe. i would say keep it boring. when talking about things like

rates, other income producing assets and think of those as part of stock portion of portfolio and don't want to hear about the math model of how the investments aren't correlated with stocks and correlations all change when the market comes at times of stress and risky stuff acts like st stocks and not like what it acted like in the past. getting 4 to 5% of the safe part of portfolio, that's getter than a few years ago and don't worry the latest print on inflation is 7% and change. that's a back ward looking figure also and next year, i don't know what inflation next year will bring and i would guess it's not 7%. i had to check my notes for next year's inflation. jack: how does the investor get access to the safe straightforward 4 and 5% yielding bonds? >> most investors can buy a fund. bnd, that's a ticker for vanguard total and bond market is a one stop shop for bonds and etfs like that. if you want to buy treasuries on auction and just buy the corporate bonds and etf, there's

lqd, another etf. if you're talking about millions of dollars putting bonds, hire someone for you and you have enough money to properly diversify a bond portfolios. jack: great advice. what does the federal reserve need to see before hiking and can the market take it? liz young on what she's telling clients, next.

jack: liz, thanks for coming on the show today. >> thanks for having me and great to be here. jack: obviously the federal reserve made it crystal clear

they're not going to stop might being till something happens and we're seeing all the layoffs and retail numbers pretty strong and jobs numbers pretty strong and should investors be worried they're going to keep going? >> investors shouldn't worry they're going to keep going and if they stopped prematurely, that would cause more problems down the road and not getting inflation underwrwraps and some stuff has happened in the tech sector in the sense that we've obviously seen a huge market correction in tech stocks and communication stocks or basically those two sectors that would comprise growthy areas of the market and now hearing layoff announcements, yes, there are some cracks forming but what i think the fed is really focusing on is they need something to happen in the inflation data, they need to get more comfortable with where the inflation data is headed, and we've seen some move in the right direction meaning downward, but still sitting at a pretty high level just under 8%.

they're not nearly satisfied with that let and not going to pause or stop any time soon. >> that's a good point that while tough it's not worsening the disease. thanksfor saying that. what does that is all a mean for the stock market? it's a tough question but do you think the bottom has been in and whatever you think there are there areas of the market where you're maybe being opportunistic big small foreign domestic? >> yeah, so first of all, i'm going to stop short of saying anything about when a bottom either maybe did occur or might occur in the future. i don't think that we've seen the last draw down of the cycle. that's what i'll say. this recent rally over the last month, month and a half has been really powerful and that's typical of bear market rallies and looking at trend in general, the market is still moving downward. this rally mass been fun and hope people are enjoying and hope people used as a

opportunity to maybe sell some winners or trim gains if you're trying to do that before, but i do fear there's likely another leg down before we really get on the other side of this. some of the signals i'd be looking at to see that are seeing data break and manufacturing new orders and those are in contraction territory and things like small business optimism and very, very low and near covid lows at this point and obviously we're seeing layoff announcements and some other a>> announcer: ments of company -- announcements of company guidance pressured into 2023 and there's indicators and things softening but we need to see it get deeper before i can be comfortable saying the market has gotten the worst behind it.. jack: fair enough. i want to pivot to student loans because sofi is in the business and does the prospect of student

loan forgiveness change your advice in terms of how much people should pay off and rush to pay off loans? >> it doesn't change the advice and one of the rules of thumb and looking at leverage you have as the consumer and how much debt you have this consumer and paying interest rate that's above what you could expect from say a regular stock market annual return and over a long term period, the s&p 500 tends to return about 7% annually. paying an interest rate that's higher than that, look to reduce that rate if it's available to you. the forgiveness program is something that likely takes away a portion of people's overall student debt loan but it does not erase the entire thing. that does concern and

overlevered and rising rate and loans and master cards. jack: that would be to crypto and if it has opportunity to crypto and trading on your platform and do you recommend a small allocation to that space and if you do, should we be worried about the safety? >> yeah, hot conversation right now. look, i have long said crypto can be something that you can plan on the margin but in very small amounts and this is not an asset class where you put rent or mortgage money in. obviously we've seen why that is. we've seen crypto go through a boom and bust psychoand will now we're at a point where we've got company failures on top of that and leverage issues within the system. this is a very risky asset class. if you're somebody that's building your nest egg, i would stay away from it for now unless you can really stomach the risk

in it and really look over a long term period to ride out some of the bumps. >> there's no way to say the price turning ratio looks good on bitcoin right you. tough to say how far that can fall. liz young, thank you. >> thank you. >> many of us rethinking household financial conditions and what to know about the housing markets car purchases and lowering 2022 tax bill, that's next.

>> rising interest rates and falling stocks and snarled supply chains having a major impact on u.s. households and the math has changed when it cops to selling your house or leasing a car. ben, we'll start with housing. it was as hot as it's ever been a year ago and suddenly stalled. if you own a house or want to, what should you do now?

>> don't do anything. i'm serious. if you have a house now, it means you probably got it when mortgage rates were 3 something or under 3% and buying a new house now, you'll have to get a rate at 6.5% or getting that lower switching to adjustable rate mortgage and hope they don't go up. none of that is a very good idea and looking for a house, at 6% rate, you cannot afford the same house at 3 so you'll get something smaller. right now just means stay put. watch what happens and see where prices come down and mortgage rates come down and make a decision. >> what about it says price housing every day and can't look up price every day of the house on bloomburg. still, people are wondering when will my house go up again in value. what do you think? >> good news is it's probably not going down a ton. bad news is it's going to take awhile to start going up again. there's been -- with the moving

rates, it's been so big and just so many people bought houses during the pandemic, so many people move that had you just don't have a lot of people wanting to move right now. there's not a lot of supply so that's going to be a problem and it'll take a long time for all this to work out and some point it will and it'll start going up again but not any time soon. jack: meantime, rents are high. better to rent or buy? >> whatever you can afford or buy and look at where you want to stay and what kind of flexibility. jack: all right, switch to sort of better news, carleton making lemonade out of lemons and people souled have a tax -- should have a tax break. >> yes, tax lost harvesting and booking losses in your portfolio to offset future gains in portfolio and we hope that future years better than 2022 has been so far. it's likely given the selloff that we've seen in markets so far that many people have probably booked those losses and if you haven't, it would be a

time to take advantage of the opportunity. >> making psychological mistake of hanging on and selling now and buying back in 31 day ifs you really like it. even if you didn't lose money, the fact that your portfolio is down creates other opportunities. >> yeah, another thing to do is take a look at retirement accounts and with that you might want to do a conversion to roethlisberger ira. yes, in doing so -- roth ira and get hit with a tax bill up front and making draws later they come out tax free and with a roth, there's no required minimum distribution and could be an estate planning vehicle. >> good planning 401k and roll them over into a back dorman roth and start a new roth and not get hit with the tax bill. okay, more goodies and tax goodies. >> more goodies. top of the show talking about asset allocation and 60/40 portfolio and other thing not talking about as much is as lett location.

if you have taxable bonds in your traditional brokerage account and move those into your tax advantaged accounts. seems like a minor step to make but look over years and decades, this could be thousands, tens of thousands in taxes you'll not be paying. jack: quick car tip before going to car guy. >> on that, pay attention when it comes to evs. if looking to buy elect trick vehicles there's new -- electric vehicles, there's new tax credits in 2023 but do your research. jack: supply and demand. supply plummeted, jack, scary to go on a car lot in covid. is it coming back? >> slowly. we have a used car index and prices are coming down just a bit and price of used cars shot up more than 50% during the pandemic. they're starting to come down. if you're thinking about buying a car, wait; right. give it six months because prices are moving in your direction. hear this pop finance advice and

better to buy a car or lease. it's not a stagnant condition and relative pricing changes overtime and might want a new car every few months but just so happens to be that lease asking a terrible deal now realtive to buying because every finance company is looking at the chart saying wait a second, i know where residual values are going and the amount of cars are worth after you're done and turned back in. they don't want to get caught upside down on the lease deals and blow out lease prices and good to get a -- difficult to get a good deal on leased vehicle and buy a car a few years old and if you're getting a electric right now, buy a cheaper one. you're riding around town and things to get for there 20,000 after the tax breaks. jack: that's a great point and interest rates are baked into leases so just think of it. >> it's a period of rapid technological change and let someone else take on the risk of buying a car and think of it for a few years. jack: steps to all take before the end of the year. jack is going to bust some

common inflationness. why gold is good for jewelry and not investors. stay right there.

sometimes conventional wisdom not so wise. this is especially true around inflation. >> i hear so many bad ideas. inflation is a rise in the price of ordinary goods and services over time, things you use. two ways to protect yourself. by inflation linked to treasury bond, and over commission to the cpi, find but if you talk about longer-term protection, usually people say by this, but they

really mean is this what the in the past. gold will not do it, not an example of ordinary good, how much to use in your everyday life? fine wines, yacht not an example. the house we are getting warm because we use it but it's one thing, they could boom or bust short-term. the best protection is stocks, the represent businesses and that makes the goods and services we use. to me that's the best way. you don't need something more. >> what common mistake, my parents bought a house for $10000 and now it's worth -- yeah, 50 years ago. stocks have done well in that timeframe, to. >> this is the notion of inflation, get expenses in order, prices have gone up, reduce inflation but think about your budget for next year and if appropriate, set cash aside. not saying get out of the market

but look at your cash needs and know you're getting paid for having cash. >> a good feeling. then. >> this too shall pass and it's a terrible year for investors but we go through years like this all the time. over most ten year period, stocks go up. ten years later they are worth more and we need to keep that in mind and hope next year is better. >> a great way to end the show. great ideas. to read more, check out was on twitter at barron's online and that's all for us. we'll see you next week. ♪ >> this week on the "wall street journal"