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2.0  ASSET ALLOCATION
​A website to read about Asset Allocation is  http://en.wikipedia.org/wiki/Asset_allocation
You can find other sites on this subject using the Google.com search engine.

My suggestion is to keep it simple and divide your assets into just 2 categories.  
The simplest allocation of a portfolio is 30 to 50% in CASH and the rest in a major market Leveraged Index ETF.
CASH maintains a potrfolio value from a major market correction (crash) and a market index ETF
provides diversification (see section 3.0) with the potential for growth of the portfolio.

Some Investment managers use an asset allocation of 4 or more categories or vary the amount in Cash
between 10% to 50% of the portfolio. The allocation of Cash depends on the existing stock Market conditions,
one’s risk tolerance and the aggressiveness of the individual.

You may need to re-balance your asset allocation under two situations:  
(1)  Should there be a drastic drop in the stock market where the percent of your CASH becomes greater 
       (ie: more than 50%) of the value of your securities, then this would be a feasible time to SELL Cash 
       Secured Put options with the Strike Price near (or even above) the Market Price to create an opportunity 
       to either acquire the underlying stock below current market price or collect more cash should the
       market stops dropping by the expiration of the option.
(2)  Should there be a continual rise in the stock market (such as in 2013 & 2014) where the percent of your
       investments becomes greater (ie: more than 50%) of your CASH, then this would be an ideal time to 
       SELLCovered Calls on your stocks with a Strike Price $5 or $10 more than the Market Price to create 
       the opportunity to SELL your stock at a profit or collecting more cash should the market up trend slows 
       down by expiration of the option..

A large trust company did a study of over 1.8 million households in the United States
with investment portfolios worth $3,000,000 or more and found the following:
     >  38 out of 100 (38%) held less than 10% of their portfolio in Cash
     >  40 out of 100 (40%) held 10 - 24% of their portfolio in Cash
     >  14 out of 100 (14%) held 20 -50% of their portfolio in Cash
     >    8 out of 100   (8%) held 50% or more of their portfolio in Cash