I read, quickly, all the responses.
1) When I was your age until late 40's I used a fairly simply allocation model between different equity sectors, with a small allocation to bonds and rebalanced either once or twice a year. The early re-balancing occurred if a sector had really ran up or seemed over-under valued.
This saved my bacon in the 1998-2001 run-up in the S&P and tech, by the way; I shifted gains in Fidelity Contra to Fidelity Low-Price, although the wisdom wasn't apparent until 2003-4, since I first significantly lagged, then very significantly lost less than the market, then significantly out-gained the market (i.e. S&P). I was both lucky and good, the latter because I stuck to my discipline despite an underperformance in the boom of 15% if I remember correctly.
The question is whether you can stick to your allocations.
2) I allowed myself to cheat on sector allocations of up to 5%, if I thought one sector was significantly over or under valued (see above and S&P in the 1998-2001). I used PEs, which the S&P was 4 times mid/small value. Again, in hindsight that was brilliant. Will the HFTs allow this to persist now--I don't know.
3) ETFs were not available to me, but if you're using a portfolio sector allocation, because of low fees, they are ideal. My suggestion is if you want to play with active or other (individual stock), set aside anywhere from 10-20% of funds and use those as your crazy money. I did this in a small roll-over for my wife, made mistakes, got better, and now I've tracked the market overall.
4) Increase your dividend-income allocation as you get older. In my late 40's in the mid 2000's I got increasingly worried about my low bond allocation, then got worried about the housing market in late 2005/2006, so started to dollar cost average into bonds from a 95-5 or 90-10 portfolio to the point that I was 55-25-20 before the crash.
Better to be lucky than good or timing is all. That's the point of sticking, within limits, to your allocation discipline and limit your play money to a percentage allocation if you want to play with beating the market.
I've out performed the S&P the last 10 years significantly but underperformed the previous 5 years, luckily when I had very little assets.
