Asset Allocation?

Traditional asset allocation - as we know it today - is in large part the by-product of the great bull market from the early eighties to the stock market peak of 2000. The majority of financial advisors and portfolio managers still utilize the same methodology which relies on the belief that things will be as they were. That is, once we get through this rough patch, the markets, and therefore the "average" return of your portfolio, will come back to "normal", the assumed rate at which you based your retirement plan upon. This is unlikely. The unprecendented growth over the two decades from 1980 to 2000, which produced cumulative returns of over 1200% was created by a unique set of anomalous circumstances, ie the baby boomers, the lack of a gold standard backing our currency which translates into easy money policies, and a different attitude toward debt. The amount of domestic consumption needed to go back cannot occur with tighter lending standards, increased savings, and our still fiat currency which the government has no choice but to continue to devalue. Portfolio allocation and income planning strategies need to be modified in order to reasonably expect the future for our retirees to be as they originally planned.