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Interesting wikpedia article, and my hero Warren Buffet was even in the movie. It seems like Merriman et als learned that Russians can default, and that when the shite hits the fan, people rush to liquidity. Bonds did convege, his strategy did work however his company was over leveraged and it was already broke by the time the big opportunity arrived. The point is that he learned that correlations of asset classes is a constantly changing/evolving thing. Two assets may be well correlated one year, like stocks and US Treasuries but then start to change and behave more like eachother so over time you have to re-balance and refigure the correlations. I am not a calculus professor so I need something simpler.

I imagine these hard lessons led to a "system" that simply uses no-load index funds to create a sophisticated asset allocation model which theoretically will help one's portfolio to have assets in good correlation to eachother, and have enough diversity to do very well over time without constant tinkering and worrying.

What is wrong with that? The suggested asset classes and the exact percentages of the allocations in the equity piece are the ones they found to be most sucessful but I imagine you don't have to follow them exactly.

I wouldn't do anything just beacuse a back-tested system said it was good, but this just seems like an easy to understand buy and hold approach that any do it yourself investor could follow at very low costs by simply allocating assets through Vanguard Index Funds for example.
I already have bonds, index funds and individual stocks, I just think I am going to try to add more index funds in the catagories he mentioned in the article and to also be more aware of the percentages I have allocated to each asset class.
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