when you get this disequilibrium was out of whack with everybody else, all of a sudden turkey, but i don't want to say it will be them, they show up at an auction and borrow money to pay the guys back from asher and everybody says every country like them i want to buy their debt either and then you can get into something like the asian crisis which can spin out of control so the risk of that is high. gerry: we started with the price of turkey and finishing with turkey so there you go. that's it for us this week. we'll be back next again next time. ♪ >> "barron's roundtable" sponsored by global x etfs.

♪ jack: welcome to a special edition of "barron's roundtable". it has been a difficult year for managing money. market turbulence, red-hot inflation challenging even the most seasoned investors. this week we tackle the big money questions on everyone's mines. we are breaking down the traditional 60-40 portfolio. does it work in this environment? the federal reserve won't stop hiking until the economy slows. we will ask investment strategist liz young. is it time to rethink major household finances? looking at housing, cars, how falling stocks can save you money and busting myths about inflation and offering steps you can take going into the end of the year. on "barron's roundtable," ben levinsohn, carleton english and jack hough.

let's start with the 60-40 portfolio, classic approach to investing, in stock 60%, bond %, bonds, 40%, the bonds act as a shock absorber but this model came into question when bond yields were at 0. yields skyrocketed and the wall street journal reported the 60-40 portfolio is on track for its worst performance since 1947 but that doesn't mean it is a bad idea. carleton: you don't want to say the 6040 portfolio is dead. jack: it is all over the internet. carleton: when you build a portfolio you' re doing it for the long-term. some years everything will work, some years nothing will work. some years you have a little bit of this and a little bit of that and hope you come out ahead. we are looking at a challenging year for 6040, through the middle of november, down 15% on par with a drop in the s&p over the same period.

you have a long-term market this year. doesn't mean it is dead but it is challenging. you don't want to minimize that but don't change drastically. jack: stocks are cheaper and bonds giving you some yields. carleton: over the last 15 years, that was never happening. the bond side of the portfolio you are getting the 4% yield. if we head into or recessionary environment bond portfolios have usually held up when talking treasuries, the flight to safety and coming in at a lower point. jack: 60-40 is not for everyone, what about 73rd? everyone says age. how much should be your wealth or what your money for, 85 years old, the us make me eligible to run for president in 12 years so might need some campaign cash. carleton: go into bitcoin.

the 60/40 thinking was you use that bond out location with your age if you are 40 years old, bond our location you have to think about what are your needs? that's what portfolio construction is. what do you need and when do you need it? that's the determining factor how much you have in risky adventures versus more conservative ones based on if you're looking to buy house or tuition or your net worth or how much risk can you handle? jack: 16 more chainsaws, keep the cash on hand. let's start with the 60%, your bond, your stock portfolio. where do you put that money? ben: stocks are so much lower you can't go wrong if you invest long-term. we are entering a point we want to be investing in stocks, not sectors. we have a long period where tech stocks outperformed

everything and then this year energy was the only thing that went up but we want to look at individual stocks, the environment are good men do well and others not so well. looking for funds, a mix of everything, and the dividend growth, aws, to look at the s&p 500, it for the s&p. jack: a straightforward index funds beating 80%. how do we invest in bonds? >> have a cup of coffee. jack: maybe 5 on high-grade corporate bonds, but investment salesman around, you could do

better than this or that or junk bonds, the purpose of this portion is to keep your money safe, when you talk about things like other income producing assets, those are part of the stock portion of the portfolio, don't want to hear about anyone's math model why they aren't correlated with stocks. correlations change when market comes. risky stuff ask like stocks. in the safe part of the portfolio that's better than you got in a couple years. the latest print on inflation is 7%, a backward looking figure. it is 7%. for next year's inflation. jack: how do you get access to it?

jack: for most investors you can buy a fund. vanguard total, bond market, and a lot of etfs like that. if you want to buy treasuries on auction, and other etfs, if you talk millions of dollars, you have enough to properly diversify a bond portfolio. jack: great advice. what does the federal reserve need to see before it stops hiking? investment strategist liz young on what she is telling clients next.

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meatpacking investments, lose younger, thanks for coming on the show. >> great to be here. jack: the federal reserve made crystal clear that it is not going to stop hiking until something happens. we are seeing something happen in the tech sector. retails pretty strong, job numbers pre-strong. should investors be worried they will keep going? >> i don't think investors should worry they will keep going because if they stop prematurely that would cause more problems down the road and we wouldn't get inflation under wraps so you are right that some stuff has started to happen in the tech sector in the sense that we have seen a huge market correction in tech stocks and communication stocks, basically those sectors that comprise growth in areas of the market and here, layoff announcements, yes there are some cracks forming but what the fed is focusing on is they need something to happen and the inflation data and 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%. i don't think they are nearly satisfied with that, they are not going to pause or stop anytime soon. jack: the cure is not worse than the disease. what does this mean for the stock market? it is a tough question but do you think the bottom has been in and are there areas where you are being opportunistic, foreign and domestic? >> when a bottom did occur, we've not seen the last drawdown of this cycle, the rally over the last month and a half, really powerful and that

is typical of bear market rallies but if you look at the trend in general, the market is moving downward. people are enjoying it and i hope people use it as an opportunity to sell those winners or twin the games as you are trying to do that before but there is likely another leg down before we get on the other side of this. the signals we are looking at, we need to see the economic data break and we are seeing what we call leading indicators point toward contraction, manufacturing new orders, those are in contraction territory, things like small business optimism, near covid lows and we are seeing layoff announcements and other announcements of company guidance being pressured into 2,023. there are indicators and things softening but we need to get

deeper before i can be comfortable saying the market has gotten the worst behind it. jack: i want to pivot to student loans. does the prospect of student loan forgiveness change your advice in terms of how much people should payoff or how quickly to pay off their loans? >> it doesn't change the advice. looking at how much leverage you have as a consumer if you are paying an interest rate above what you could expect from regular stock market annual return over a long-term period the s&p tends to return 7% annually. if you are paying an interest rate that is considerably higher than that you should look to reduce that rate if it is available to you. the forgiveness program likely takes away a portion of people's overall student loan debt load but does not erase the entire thing. there is still a lot to be said

for managing debt levels and even if you look at the data we've seen the last few months, credit card debt in the united states has soared. that is something that does concern me a little bit. don't want consumers to get too over levered in a rising rate environment. jack: weather is 7% student loan or 17% mastercard debt. one more thing. crypto, people have the opportunity to trade crypto on your platform. do you recommend the small location to that space. if you do should we be worried about the safety? >> hot conversation. i have long said crypto can be something you can play in on the margin but in small amounts. that's not an asset class you put your mortgage money in. obviously we have seen why that is, crypto goes through a boom and bust cycle and now i do

point where we get company failures on top of that and leverage issues within the system. this is a very risky asset class. if you are 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 our long-term period to ride out those bumps. jack: the price to earnings ratio looks good on bitcoin right now. thank you so much. rising interest rates force many of us to rethink household financial decisions. what you need to know about the housing market, car purchases and lowering your tax burden next.

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on us households. the math has changed when it comes to selling your house or leasing a car. it was as hot as it has ever been a year ago suddenly stalled. if you want to own a house what do you do next? ben: don't do anything. if you have a house you probably got it when mortgage rates were under 3%. going out and buying a new house now you would get a mortgage rate of 6.5% or switch to an adjustable rate mortgage and hope rates don't go up. don't think that's a good idea and if you are looking for a house at a 6% rate, you're going to get something smaller. it just means stay put. keep watching what happens, see if prices come down and mortgage rates come down and make a decision. jack: warren buffett says you are lucky they don't price housing every day or look at the price of today's house, but

still people are wondering when will the house start going up in value again? ben: i don't think it will go down a ton but it will take a while to go up again. the rates have been so big, so many people bought houses during the pandemic, you don't have a lot of people wanting to move, not a lot of supply. it will take a long time for this to work out and at some point it will come up again. jack: is it better to rent or to buy right now? ben: you want to look at the affordability, what kind of flex ability you need. jack: making lemonade out of lemons, people have an opportunity for tax break that they should seize. carleton: you are trying to book losses in your portfolio to offset future gains in your

portfolio because we hope future years will be better than 2022 has been. it is likely given the selloff we've seen in markets that many people booked those losses but it is time to take advantage of the opportunity. jack: don't say i will hang on until by breakeven. even if you don't lose money the fact your portfolio is down create other opportunities. carleton: look at your retirement accounts, convert to a roth ira. you get hit with a tax bill but when you make withdrawals later, there is no required minimum distribution. for some people that could be a vehicle. jack: if you have a good 401(k) you could roll can roll your additional 401(k) into the 401(k) and then start a new

roth and get the tax bill. more tax goodies. carleton: we talked about asset allocation. the other thing, asset location. what you might do, if you have taxable bonds in your traditional brokerage account you would want to move those or other high-growth assets into your tax-advantaged account. seems like a minor step but when you look over years and decades of this could be tens of thousands in taxes you will pay. pay attention when it comes to evs. there are new tax benefits going into effect in 2023 but this is an area you need to research. jack: supply plummeted, scary to go into a carlotta during covid. jack: some we have a chart of the used car index showing prices are coming down a bit. the price of used cars shot up

50% during the pandemic. if you are thinking about buying a car give it 6 months because prices are moving your direction. you hear it is better to buy a car than lease a car. i hate his that advice. it's not a stagnant condition. the relative pricing changes over time. you want a new car every few weeks but leasing is a terrible deal now relative to buying. every finance company says i know what residual values are, to turn back and. they in. they don't want to be caught up, it is difficult to get a good deal on a lease, to buy a used car or electric vehicle stick to the cheaper end. the chevy volt, not taking long distance trips, after the tax breaks. jack: interest rates are baked into this.

jack: let someone else take that risk. it something you have for a few years. jack: you have steps we can take before the end of the year. why gold is good for jewelry but not for investors. stay right there. this is finan. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ nicorette knows, quitting smoking is freaking hard. you get advice like:

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>> "barron's roundtable" brought you by global x etfs. more information visit foxbusiness.com/"barron's roundtable". jack: sometimes conventional wisdom not so rise, what do you think? jack: inflation is a rise in the price of ordinary goods and services over time. things you use, you can buy and inflation linked treasury bond, you get and avert -- if you talk about longer-term protection usually when people say to buy this gives an inflation hedge.

what they mean is this went up at some point in the past and i think it will keep you out of inflation. gold is not going to do it. it's not an ordinary good or service. how much gold do you use in everyday life? fine wines are not an example. a house, we are getting warm because a house we use but it is just one thing. houses can boom or bust. i would say the best inflation protection is stocks because stocks represent businesses, businesses make all these goods and services we use. that the best way to keep up with inflation. you don't need something more to give you inflation. jack: people say my parents bought a house for $10,000, because it was 50 years ago. stocks have done well in that timeframe too. you have an actual idea for us. carleton: off of the notion of inflation, take your expenses in order for the next year. prices have gone up.

we see inflation cooling a bit, but you want to think about your budget for next year and if appropriate such some cash aside. not saying get out of the market at all but look at what your cash needs may be and it is not totally a bad idea. jack: your thoughts? ben: this has been a terrible year for investment no fun at all. you have to remember the market can't go up forever and most 10 year periods stocks go up. we need to keep that in mind and hope next year looks better. jack: great way to end the show, great ideas. to read more check this week's addition of barron.com and follow us on twitter, barron online and that is all for us. happy thanks giving, see you next week on "barron's roundtable". ekend, everybody. see you next time.