We must always remember that market data is not the same as data in a physics experiment. It is not necessarily repeatable in multiple samples. We have one look at the past. In fact, one data point. Relying too much on this, no matter how sophisticated the mathematical model, can lead to poor results.
Simulators have their weaknesses as well.
The look forward is only as dependable as the inputs are reasonable. If we plug in the assumption that bond yields over time will be twice as high as stock market returns, we can count on some pretty strange results. Unless one knows a great deal about an institution's needs through time and their tolerance for risk, one shouldn't even guess on the subject. And yet, we are asked for our views all the time. What follows are two portfolio mixes that can act as the foundations for further discussion.