Leverage. You can translate reduced risk into greater returns by getting loans to invest more.
(You don't need to try and time the market for this to work. You can have a threshold so that you rebalance when you deviate from your target allocation more than X%)
Or in other words, show me the numbers.
According to https://www.justetf.com/en/etf-strategy-builder.html (click on "show simulation" and it will show the historical analysis) a 80/20 allocation slightly outperforms total stock over the last 20 years, while having lower volatility at the same time. I did not run the numbers myself.
Considering only the last 10 years seems pretty limited, as you are ignoring both the dot-com bust and the 2008 crisis.
Mixing bonds gives you a slightly higher safe withdrawal rate but you do lose 2 percentage points average yearly returns.
I can see how this would lower the volatility of your portfolio. But how do you improve the return in this scenario?
> This is the same reason that a 60/40 stock-bond portfolio has massively outperformed 100% stocks historically
How is this possible? If I invest 100% in stocks, my return after 10 years is higher than 60/40 stock-bond. So why do you say the latter outperforms it?