Ibbotson’s earlier work (with numerous co-authors) has documented the past returns of the major asset classes, thus revealing the payoffs received for taking various types of risk, and has presented an approach to forecasting future asset class returns. The asset classes that Ibbotson and his associates are best known for studying are stocks, bonds, bills, and consumer goods (inflation). Knowledge of the past and expected returns of these asset classes, and knowledge of the degree by which realized returns might differ from expected returns, is what makes conven- tional asset allocation possible. But it is not the whole story. The present monograph finishes the story and makes scientific.
