When liquidating stocks are commissions due
Much of the advice presented to investors during periods of unusual market activity should be ignored.It is more important to rebalance the retirement portfolio on the basis of a change in risk aversion, rather than on the conditions in the financial markets." Basically, this paper supports the idea of strategic, not tactical, asset allocation. active management not only failed to add value above the policy benchmarks [but] it destroyed a significant portion of investors' value." This paper concludes that asset allocation accounts for about 134 percent of the level of portfolio performance (implying that active management accounts for about minus 25%).
It finds that treasury bonds are a complete hedge against expected inflation.
We've listed herein a mix of good articles from the popular press (intended for lay people) and highly technical academic papers.
Hopefully, these materials will elucidate more than they confuse.
Here's the outstanding book where they elaborate in depth on this idea.
This was the paper which revolutionized portfolio construction by emphasizing the importance of asset allocation.
In general, we do not agree with the 100% stock asset allocation recommendation except in cases where there is a very high willingness and ability to tolerate risk. Riepe, "The Role of Asset Allocation in Portfolio Management," Ibbotson Associates (40kb). This paper also appeared in Global Asset Allocation: Techniques for Optimizing Portfolio Management (John Wiley & Sons, 1994).