Intelligent asset allocation is a simple strategy. You pick several different non-correlated or lightly correlated asset classes and diversify among them. The little return loss from the diversification is more than made-up for by the limited drawdowns.
I’ll start with my favorite, Quant extraordinaire Meb Faber takes investor down a road of mimicking the portfolios used by the Harvard and Yale endowments. The end portfolio not only allows individual investors to get in on the same returns as Harvard, but also blends in momentum and trend following excitement.
Harry Browne’s permanent portfolio has been widely adapted from financial newsletter writers looking for an easy to follow and recommend asset allocation. The portfolio divides equal amounts into US stocks, treasury bonds, cash and gold.
The cash, gold and treasury bond allocations are probably a little too high and I would recommend allocations in real estate, natural resources and foreign stocks as well.
Wes Gray and Jack Vogel started by destroying the active investment management industry and then show how to use momentum and value to improve upon the portfolio established in The Ivy Portfolio by Meb Faber.
We’re back to Meb Faber! In this book, he compares several different allocation strategies put forth by famous investors (including the permanent and ivy portfolios) and back-tests each. Spoiler alert: they all have returns around the same level and an average fee amount makes the highest returning strategy the worst.
Here’s my book! In addition to the portfolio I follow on the site, there are tons of other amazing and life-changing tidbits.