2) You can look at the allocation in the "total" indexes. For example Vanguard Total World shows the market percentages for US/international and developed/emerging markets. US large/small depends on where you make the cutoff. This S&P 500 fact sheet shows the total market cap is $6,927 billion. This S&P Total Market Index fact sheet shows the total market cap is $9,491 billion. That means 73% large, 27% small.

3) Yes Graham did say that. I haven't figured out what are the reliable indicators yet. If it were that obvious, the market wouldn't have gotten overvalued in the first place because everybody would know. So I will be a defensive investor as defined by Graham.

4) We have ETFs for almost every sector. You can certainly short the hot sector if you want to. I'm not that brave though. I'm doing my version of hedging by staying more on the value side. But then we get into the current situation where financials looked like value but they are really not. There are no easy answers.

1) Shouldn't REITs now be considered basically the same as large cap stocks? As an economy suffers, real estate net income and valuations suffers. As an economy surges, net income and values take off. I work in commercial real estate and am feeling the painful effects of this right now. I guess the only thing that might somewhat differentiate REITs in my mind is the 'hard asset' aspect of real estate. As the saying goes, 'they haven't figured out how to create more land' and fixed material / construction costs will usually provide somewhat of a floor for what landlords will be willing to rent or sell for.

2) Where can the 'market' percentages for the major market segments you reference above (intl, small cap, emerging, etc) be found and updated on a regular basis?

3) I'm part way thru Graham's book and correct me if I'm wrong, but the message I took was move towards 25% stocks when the markets are overheated (last year) and if you're willing to take the risk, move towards 75% when you think its undervalued (now). In hindsight it seems silly to have not realized the market was overheated in 2007, but most of us didn't. For simpletons, what few market indicators would be the best evidence of over / under valued equity markets and where's the best place to get the data? My guess is following market P/E ratios is the one factor most people would follow to make that determination.

4) Lastly, if you take the last question a little deeper and analyze the market's major sectors, would it make sense to keep your overall asset allocations stable but buy some sort of hedge or short fund against an overheated sector? I'm not even sure where to find that fund, but using history as an example, it would have been great to stay invested in the late 90's, but be hedged against tech. Is this practical for a mostly passive index investor? As much as proponents of passive index investing preach that you have to pick an allocation and stick with it at all times, some high level strategic shifts seem to make more sense than just staying put at all times.

Thoughts?

Great site by the way….

Unfortunately, I don't have Microsoft Publisher so I can't download the template or open the .pub file.

Matt

Nice work. I linked in via Diehards. Was the cascade model made via PowerPoint? The graphic is more powerful than a simple table and would like to use something similar for my own portfolio breakdown.

Matt

Re REITs and asset classes, to me anything can be another asset class, as long as it provides diversification by being un- or negatively-corrleated with other asset classes.