Bob Elliott
· Nonconsensus
· May 19, 2026 at 10:48
· ⏱ 5 min read
| Read on Substack ↗
Summary
30-year TIPS now yield ~3% real, a multi-decade high, making them a compelling lock-in for risk-averse investors, especially those near retirement. Historical US stock outperformance may not repeat, and lower-risk portfolios (20/80, 30/70) have often underperformed 3% real, shifting the calculus in favor of TIPS as a generational opportunity.
•30-year TIPS yield near 3% real, levels last seen during the GFC liquidity crisis.
•US 60/40 portfolio has beaten 3% real in nearly all 30-year periods over the last 100 years, but that relied on US stocks outperforming global stocks by ~3% real annualized.
•A 20/80 or 30/70 portfolio would have underperformed 3% real in a majority of 30-year periods, even with US exceptionalism.
•If US equity returns simply match global returns (3% lower real), the case for TIPS becomes far more compelling.
•Using a long-term expected real short rate of ~1%, equity vol of 15%, and Sharpe of 0.25, expected real equity return is ~5%, making 60/40 expected return closer to 3%.
•Author suggests hedging TIPS with gold (10-20% allocation) against the risk of government manipulation of inflation statistics.