When Robert Shiller, a Yale economist and bestselling author, told a crowd of finance prof

essors and economics students last spring that only 10 percent of his money was invested in stocks, they gasped.

Managers might suggest anywhere from 50 to 90 percent. But 10 percent？ This was heresy.

How about 0 percent？

That's the share that investors should plow into domestic stocks, according to Ben Inker, director of asset allocation for Grantham, Mayo, and Van Otterloo & Co. (GMO), a money-management firm with some $85 billion in assets.

Welcome to a contrarian view of today's equity markets. A small but vocal band of heretics is calling into question not only the profit potential of stocks but also the foundation for conventional wisdom about investing. Even for those who disagree with them, their arguments serve as a reality check for the market.

Are conventional portfolios really as safe as experts say？

"Don't be surprised that the Wall Street brokerage firms spend most of their time telling you that stocks are cheap," warns Mr. Inker. "Wall Street likes the market. It likes trading. Wall Street makes a lot more money off of trading stocks than trading bonds."

The trick is to determine your portfolio's exposure to risk, analysts say. And that depends to a surprisingly large degree-on how diversified it is and how long you're prepared to stay the course. These are key elements of "modern portfolio theory,", which came into being in the 1950s and eventually won its creator, Harry Markowitz, a Nobel Prize.

Essentially, portfolio theory holds that investors reap the greatest return with the least risk when they allocate their money among diverse classes of assets, hold them for the long term, and rebalance the portfolio when the various classes of assets stray too far from their original allocation.

To make it work, you need to own asset classes that don't move in lock step, make accurate estimates of their future returns, and use a very long time horizon. A miscalculation in even one of these steps, however, can seriously hurt the prospects for reaching your ultimate goal.

"The long-term nature is the driving force of the portfolio," says Jerry Korabik, vice president of Ibbotson Associates, a Chicago-based asset allocation adviser. "All of our clients are institutions, and we develop portfolios with 10-, 20-, even 30-year time horizons."

Riding the roller coaster

Thus, investors should never try to get in and out of the market at specific times, the theory holds. Instead, they should ride the inevitable ebb and flow of prices. If they have allocated their money correctly, some portion of their portfolio will almost always be making money. By rebalancing their portfolios periodically-selling off some of the winning asset classes and buying more of the losers- they are continually buying low and selling high, at least in a relative sense.

This buy-and-hold strategy has won over hordes of investors. The average Fidelity retirement account has nearly 60 percent of its money in stocks, a recent study found. The overall average for retirement accounts: 61 percent, according to the Employee Benefit Research Institute. Even equity allocations for college and university endowments hover around 57.1 percent, says the National Association of College and University Business Officers.

The problem is that investors sometimes have to be extraordinarily patient for the strategy to pay off. In 1981, for example, the S&P 500 Index stood at the same level it first achieved in 1965. Today, the index is about 30 percent lower than its peak in 2000. Do investors really have to put up with such long periods of losses？

Profits of impatience

No, say a small contingent of money managers. By avoiding the stock market as their primary engine for profit during the past five years, several of the

A．the fund's performance during the 1990s is very poor

B．the fund lost money during the 1990s

C．the fund did exceedingly well during the 1990s

D．the fund's profits were not good enough