Core Viewpoint - The article emphasizes the importance of stock assets in long-term investment strategies, highlighting their historical performance compared to other asset classes [5][10]. Asset Allocation Insights - The acceptance of diversified asset allocation strategies has increased, with a broader range of asset classes being considered [3]. - A correlation analysis of major stock indices reveals that while Asian markets show higher correlation, European markets are also closely related, suggesting potential benefits from diversification across different regions [8][15]. Investment Strategy and Performance - Backtesting results indicate that a diversified portfolio of stocks from seven major countries yields a cumulative return of 289.02%, slightly lower than the benchmark of 299.04%, with an annualized return of 7.07% [10]. - The maximum drawdown for the portfolio was 54.71%, indicating significant risk despite the lower annualized volatility compared to the benchmark [10]. - Historical performance shows that while most years yield positive returns, there are notable downturns in specific years, such as 2008 and 2022, where the portfolio experienced substantial losses [12][18]. Risk Management and Diversification - The article suggests that during extreme market conditions, the correlation between different stock markets tends to increase, leading to simultaneous declines, which undermines the benefits of diversification [17][18]. - To mitigate risks during such periods, it is recommended to include assets with different driving factors, such as bonds and commodities, in the investment portfolio [18][34]. Recommended Asset Allocation - A proposed asset allocation strategy includes 60% in equity funds, 30% in bond funds, and 10% in commodity funds, aimed at balancing risk and return [20][22]. - The bond allocation is intended to provide stability and reduce overall portfolio volatility, while equity funds are expected to capture growth opportunities [23][24]. Conclusion - The article advocates for a diversified investment approach that incorporates various asset classes to enhance long-term returns while managing risks associated with market volatility [34].