Investing - Asset Allocation - Part 4

[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]Editor's Note: This post was published at the Carnival Of Investing #62 - The Oscars of Investing and was awarded the Oscar for "The Best Special Effects (Technical Explanation)". We thank you all.[Continued from Investing - Asset Allocation - Part 3]Static Models of Asset AllocationIn part 1 we have