Asset allocations recommended by very smart investors differ dramatically. Buffett recommends 90%/10% stocks to short term treasuries. Bogle recommended a bond allocation equal to one's age (23% stocks/77% bonds for me). Schwab target funds adjust asset allocation from 97% stocks forty five years before retirement to 44% at retirement to 28% twenty years after retirement. Amusingly, William Sharpe, famous for quantitative analysis and the capital asset pricing model, said that he invested an amount in stocks versus bonds that he could "stomach losing."

These different allocations result in huge differences in return. Over the last 10 years the S&P 500 has returned 15.3% annualized (or a 315% cumulative return from $1 to $4.15); Schwab's 60/40 fund has returned 8.0% (a 115% cumulative return from $1 to $2.16, and Schwab's Target 2015 Fund has returned 6.1% (an 81% cumulative return from $1 to $1.81). These spreads are just for 10 year returns. What about 40 year returns?

So who is right? Asset allocation is the most important investment decision, much more important than individual security selection. We, I, need to figure out the right answer.