The quote below from John Bogle (former Chairman of Vanguard Investments) can be found on page 176 in the text. He emphasizes the importance of asset allocation and cites the results of the Brinson study as proof. However, there is an error in Mr. Bogles quote.

Identify and explain the error. Hint: read through the papers by Brinson, Hood Beebower and by Ibbotson & Kaplan which can be found in Canvas under Modules.

The most fundamental decision of investing is the allocation of your assets: How much should you own in stock? How much in bonds? How much in cash?... That decision [has been shown to account] for an astonishing 94% of the differences in total returns achieved by institutionally managed pension funds... There is no reason to believe that the same relationship does not hold true for individual investors. John Bogle