Bank of America has warned its clients that the traditional balanced investing model, which allocates 60% of stocks and 40% of bonds, is failing due to inflation and rising oil prices. The bank's 60/40 portfolio has been outperforming this year, with the iShares Core 60/430 Balanced Allocation ETF (AOR) up less than 1% year to date and the S & P 500 down roughly 1%. Strategist Jared Woodard stated that most 60/400 models are likely to incur losses in 2026 when accounting for inflation. The recommendations for diversifying include adding income-generating emerging markets ETFs and international small-cap value stocks.