Aired 10/30/11 James Picerno writes the popular blog The Capital Spectator. One of his main topics is asset allocation. He has a book that came out in February called Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor. Asset allocation is important. It determines much of the returns investors will receive. This book goes into a long discussion of modern portfolio theory, and the author finds MPT to be valuable, but needs to be supplemented by other factors other than the market portfolio. Market capitalization, individual stock valuation, and overall market cheapness/dearness plays a role in asset allocation. This rectifies the main complaint of value investors regarding asset allocation, in that relatively lower prices should lead investors to allocate more to an asset class.