The Numbers Come First
On August 3, Goldman Sachs chief global equity strategist Peter Oppenheimer published a note conceding that 'there does not appear to be a valuation bubble, but there may be an earnings bubble' in the technology sector. Hours later, Apollo chief economist Torsten Slok wrote in his Daily Spark note that 'the 60/40 portfolio is broken,' arguing that with the AI trade slowing and government debt projected to reach 175% of GDP, 'neither the 60 nor the 40 responds to what made it work in the first place.'
Both warnings landed after a volatile week of Big Tech earnings. Microsoft surged 17% in a single session — adding nearly $500 billion in market capitalization in one day, its largest single-day move since 2008. Oppenheimer noted that the market is seeing changes it has not seen since the Great Recession.
The Architecture of the Old Assumption
The 60/40 rule — 60% equities, 40% bonds — traces its theoretical roots to Harry Markowitz's 1952 portfolio theory, but became institutional orthodoxy during the four-decade stretch of falling interest rates that began in the early 1980s. That long decline allowed bonds to serve as both income and ballast against equity volatility, a dynamic analysts have called the 'golden age' of investing.
Slok's warning is not a reaction to a single bad quarter. He has argued since at least 2023 that rates would stay 'higher for longer' than consensus expected. By late May 2026, he had sharpened that thesis into a specific yield-curve mechanism: front-end rates rising on sticky inflation, the middle of the curve under pressure 'because of hyperscaler issuance,' and long-end rates climbing on 'more Treasury supply and less Fed demand.'
Capex Erodes the Premium
Oppenheimer's equity-side diagnosis aligns with Slok's macro view. 'More government debt, increased issuance, and persistent inflation have all contributed to a higher cost of capital, leaving earnings as the key driver of returns,' he wrote. The explosion in capital expenditure among hyperscalers since ChatGPT's emergence has increasingly eroded their premium cash flows, forcing them to turn to debt and equity markets for funding. The premium the five biggest U.S. stocks once commanded over the S&P's other 495 has, according to Goldman, 'almost disappeared.'
For the first time since 2009, the equal-weighted S&P 500 has outperformed the market-cap-weighted index by more than 7.3%. Goldman called it 'a healthy normalization following years of very high concentration in both market capitalization and performance.'
Warnings were already circulating outside the big banks. On June 3, Acadian Asset Management's Owen Lamont argued that expected long-term S&P 500 earnings growth had hit 20.2%, exceeding the 2000 peak of 18.6% — a figure he said made 'today's optimism … yet another way in which 2026 is looking like 1999.' JPMorgan CEO Jamie Dimon was blunter still: 'It's gung ho, folks … There's a lot of exuberance out there.'
What This Means for Capital
When Goldman Sachs and Apollo — two institutions with strong institutional incentives toward optimism — issue structural warnings on the same day, the market has already voted. The 60/40 portfolio was built for a world of falling rates and contained government borrowing. Neither condition holds today.
For American investors and retirees who built their financial plans around that framework, the message is uncomfortable but clarifying: government deficits matter, debt loads matter, and earnings multiples that outpace 1999 levels demand scrutiny. Free enterprise rewards clear rules and honest price discovery — not earnings projections stretched beyond what the underlying business can deliver. Capital will find its own level. The question is how disorderly the adjustment turns out to be.
