Tom,

In this portfolio, how do you determine which asset classes to hold in the income and long-term growth portfolio? Once you determine acceptable asset classes, how much do you decide to put in each one? If I have high-yield stocks in my income portfolio and active equity in my long-term growth portfolio, it will be difficult to remove volatility from the client discussion in a 2008 or similar market downturn when BOTH portfolios have lost substantial principal. Is there a place for diversifying asset classes like commodities, real estate, or private equities in either of these portfolios? Your solution divides portfolios behaviorally for the benefit of client discussions, but still does not solve the problem of how to construct the portfolios.