Allocating assets for a retirement portfolio requires three basic rules: 1) Pick a universe to study, 2) figure out how and which assets to allocate your money into, 3) pick your tactics (e.g. lay yer money down, spin the wheel, buy-and-hope, etc.).
Let's take that from the top:
Step one: Go grab a bunch of data off the web, analyze the heck out of it, throw in some anecdotal knowledge (have your age in bonds, buy-low, sell-high, etc.), and say “a-la-peanut-butter-sandwiches.” Poof! You're an analyst, advisor, broker, self-directed-investor-market-timer-whatever. This is easy to do with any number of tools. Doing it correctly is slightly more difficult. I'm an open source nerd so I use tools like R Project, GLPK and Linux. Some folks use spreadsheets. Use whatever you like.
Here's my universe:
Fixed-Income/Bond Assets (TIP, SHY, IEF, TLT, AGG)
Commodities (IAU, SLV, GSG, BDC, USO)
Global Equities/Emerging Markets (FXI, EFA, EEM, IEV, IOO)
U.S. Equities (OEF, IVV, ISI, IYY, JKD, JKG, JKJ)
Leveraged Assets (i.e. Double Longs) (DDM, SSO, QLD, MVV)
Inversely Correlated Assets (i.e. Shorts) (DOG, SH, PSQ, MYY)
Inversely Correlated and Leveraged Assets (i.e. Double Shorts) (DXD, SDS, QID, MZZ)
U.S. Equity Sectors (XLF, IYM, XLE, VNQ, XLI, XLY, SMH)
Not an "optimal" set of possible choices, but a good place to start. For now, let's forget about options, hedge funds, one-fund funds, etc. and other strategies that detract from a portfolio allocation discussion. This is a universe of ETFs where I can obtain daily return data for from
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