Hi Is7550, If you go 10% across your portfolio and add 10% US stocks and 10% REIT you improve your results by 128% - $479,822 versus $374,636 - without increasing risk all that much but with a lot smaller max draw-down than an all stock portfolio.
I suspect that, among all the asset classes listed one could construct a portfolio that does even better; however, as we all know, past performance, yada, yada, yada...
Given that we have transitioned to a lower inflation rate - at least by official statistics - and very low or no deflation economy plus other things that are different now compared to the 1945/~1980 years I suspect that backtesting that goes back very far is probably not going to give us much better insight into the results that might happen going forward.
Looking at the longest official recent bull run market- March 1991 to March 2001 - it seems noteworthy that both the beginning and the end were just after a presidential election.
The beginning of the current bull run market is June 2009, - the actual low point for the S&P 500 was in February - also just after a presidential election.
So where is this bull run going to end? I'd say, given prior economic cycle history, the stock market election cycle, the bizarre year ending in 5 cycle and the presidential election cycle, we might well lay a bit of money that there will be a starting point for the bears to devour the market sometime over the next 18 months.
Also the current zig-zag sideways movement of the market over the last few months seems to approximately mimic 2007. Will 2016 mimic 2008? Hard to say but historically the election year has not been all that good for the market.
Also look at the Vwave, quite high for the last few months
It seems to me that we need to keep our power dry and have enough on hand to kill the bear so that we can feast when the banquet is served roughly 24-36 months from now.
But we must not ignore the possibilities, the black swan events - like earthquakes in Nepal or Fukishima - that could happen in a major economic locale. The editorial cartoon by Tom Meyer says this most eloquently when he compares Nepal's devastation with the possibilities for California's levees, water infrastructure, etc.
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