Gina Bolvin thinks the 60/40 portfolio will return in 2023. But the president of Bolvin Wealth Management Group has some specific advice for investors considering this strategy after a year of decline. This strategy involves placing 60% of the investment in stocks and the remaining 40% in bonds. According to Morningstar, the portfolio is already down about 20% by 2022 as both the equity and fixed income markets plunge. Now, some are wary against this strategy as questions surround the likelihood of a recession and what the investment landscape will look like in 2023. Bolvin, with 25 years of planning experience Financial planners, disagree, argue that the bond market will become more stable – and, in her words, “boring again” – when the Federal Reserve changes direction to raise interest rates. That will help the 60/40 portfolio once again execute an effective investment strategy, she said. She noted that bonds tend to perform particularly well after the central bank stops raising interest rates. And 2023 could be the year when bonds become “classic diversification” once again, she said. “I’m amused that after a bad year, I’ve seen advisors say 60/40 portfolios are dead. It’s very rare for bonds to drop in double digits,” she said. “The 60/40 portfolio has a good track record over the long term, so one year is not the trend.” How to Play 60% In the equity portion of the portfolio, Bolvin recommends leaning slightly towards value stocks and favoring more industries, especially aerospace and defense stocks. thanks to an uptrend in defense spending, some stock buybacks and solid dividends in the sector. Bolvin said capital spending was “resilient” even as parts of the broader economy struggled. Bolvin also highlighted the benefits stemming from “reshoring” and its impact on semiconductor stocks as companies move production out of China. Syracuse graduates also recommend financial stocks, especially large banks and brokerage firms, noting that a strong balance sheet following the 2008 financial crisis helped the benchmark group how better to cope with the economic downturn. She also touted the appeal of the wealth management business and said a dismembered Capitol Hill makes strict financial regulation less likely. The last sector Bolvin highlighted was energy, the only group in the S&P 500 that rallied last year. She said limited global supply would keep stocks rising, while China’s reopening of the economy provided additional benefits. Bolvin said technology could recover as the Fed nears the end of its rate hike campaign. While she doesn’t advise getting into the field until investors have a better understanding of the inflation path and future central bank moves, she said that investors should have some exposure since it’s the largest portion of the S&P 500. In the group, Bolvin said cybersecurity stocks could be a good game because companies “won’t skimp on security.” How to Play 40% On the other hand, Bolvin is less picky about bonds. “In the fixed income market, we think frankly that there aren’t many wrong answers,” she said. Bolvin said investors with maturities of three to five years or longer should consider corporate bonds with short maturities and high-quality features. She also said preferred and high-yield securities appear healthy over the same period. She said that investors concerned about a recession should look into one- to three-year short-term Treasury and corporate bonds. Bolvin’s company manages about $380 million in assets.