Asset allocation is widely accepted as one of the most important, if not the most important decision for strategic-minded investors. But even if you accept the premise–and there are many reasons why you should–there’s still the question of how to manage the asset allocation strategy. The default choice is letting Mr. Market run the show, which follows a strict interpretation of modern portfolio theory. That is, own the world’s stocks and bonds in their market-weight proportions and let the market rebalance the weights from there. Deviating from that approach embraces active-management risk, which of course comes in a rainbow of choices. One that caught our eye recently is a momentum-based tactical asset allocation (TAA) strategy designed by Mebane Faber of Cambria Investment Management in Los Angeles. His paper on the strategy appears in this year’s Spring issue of The Journal of Wealth Management. No, we’re not necessarily recommending the strategy, nor are we dismissing it. Readers will have to make up their own minds on its merits. That said, a closer look at Faber’s strategy provokes worthwhile debate about how portfolios work and what investors can expect when it comes to second-guessing Mr. Market’s global asset allocation. We recently interviewed Faber in the September issue of WM. You can read the conversation here….