[rockrock]

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Ed, my allocation looks a lot like yours, but I am heavier in Foreign markets (35-40%).

This is something to consider as it is a hedge against a major drop in the dollar.

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I haven't read this whole thread, but I suspect this is the best post in it.

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Ok, that's a fair point... my worry when I first constructed it was that I was too heavily invested in US stocks. So how would you change it exactly? How about?

Fairholme - 30%
Vanguard 500 Index Fund Investor Shares (VFINX) - 15%
Vanguard Small-Cap Index Fund Investor Shares (NAESX) - 20%
Vanguard European Stock Index Fund Investor Shares (VEURX) - 20%
Vanguard Total International Stock Index Fund (VGTSX) - 15%

I don't like skimping on Fairholme, though... I think it's quite likely to beat the market less fees (the fees and turnover are modest). Maybe just take out the 500 fund altogether, just letting Fairholme represent the big stuff:

Fairholme - 40%
Vanguard Small-Cap Index Fund Investor Shares (NAESX) - 20%
Vanguard European Stock Index Fund Investor Shares (VEURX) - 20%
Vanguard Total International Stock Index Fund (VGTSX) - 20%

BTW, this is more of a learning exercise than anything else. The actual amount of money in my Microsoft 401k is small (by small, I mean 10% is about the smallest allocation I can make into any fund).

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you need international small cap (VINEX and others) and commodities (PCRIX) because these are low to non correlated, different asset classes than what u have listed.