Inflation and volatility aren’t new, but after decades of subdued price growth and steady bond markets, today’s conditions can feel unfamiliar. The ground rules for “classic” portfolio construction have shifted.
In Episode 5 of Dime After Dime, host Tony Stich welcomes back Managing Director and Head of Quantitative Strategies, Charles Chesebrough, to explore how investors might rethink allocation and mindset in a period marked by persistent inflation and higher interest rates.
Don’t Call It a Comeback: Inflation’s Return to the Spotlight
Inflation has re-entered the conversation in a way many investors haven’t experienced in years. As Chesebrough recalls, inflation was once “chapter one” in economics because it steadily erodes purchasing power—then it receded for much of his career before resurging after the pandemic.
Recent data show price growth running above the pre-pandemic trend: the CPI rose 2.9% year-over-year in August 2025 (core 3.1%), compared with the ~2% pace that characterized much of the 2010s. Bureau of Labor Statistics For younger investors, that’s visible in everyday expenses; for retirees on fixed income, the impact can be acute.
Rethinking the 60/40 Rule
The traditional 60/40 stock-bond mix deserves fresh scrutiny. Not because it’s “wrong,” but because longevity, inflation uncertainty, and correlations have changed the backdrop. As Chesebrough puts it, allocation should depend on each investor’s goals, time horizon, and risk tolerance.
Diversification also means more than splitting stocks and bonds. It can include time-based (e.g., contribution cadence), liquidity-based, and risk-based diversification. Or, as Chesebrough notes, a portfolio should be built not only to perform, but to endure.
Potential tools to address inflation risk (selection depends on suitability and constraints):
- Dividend-paying equities that can provide cash flows even as prices rise.
- TIPS, whose principal adjusts with the CPI-U; interest is paid on the inflation-adjusted principal.
- Select real assets (e.g., real estate) that have historically offered partial inflation sensitivity, though results vary by cycle.
- Private markets (e.g., private credit or private equity) to diversify return drivers away from daily public-market moves, while recognizing their unique risks, fees, and illiquidity.
Discipline Over Prediction
One practical habit is dollar-cost averaging—investing at regular intervals to help avoid emotional decisions and smooth entry points through volatility. Evidence suggests DCA can help investors stay invested, especially through choppy periods (though in steadily rising markets, lump-sum investing may outperform).
As Chesebrough cautions, reactions to headlines such as panic during market declines or euphoria during new highs can harm outcomes more than inflation itself. An experienced advisor can provide perspective, structure, and accountability to help investors stay the course. The consistent message is that discipline beats prediction.
“Stick to your guns. Be disciplined, make sure you have enough growth, don’t let inflation scare you.” — Charles Chesebrough
To hear more from Charles Chesebrough and other advisors on our team, we encourage you to explore our upcoming seminars, where we share timely perspectives and practical insights for investors. Visit our events calendar here.
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