This is the typical investment advice, and it's generally outdated and wrong to just invest in index funds based on asset classes if your goal is to diversify away volatility.

For a layman's treatment debunking this view (don't mind the title):

http://www.amazon.com/Jackass-Investing-Dont-Profit/dp/09835...

for a more academic flavor:

http://www.amazon.com/Expected-Returns-Investors-Harvesting-...

the best book on stock picking i've read:

http://www.amazon.com/Quantitative-Value-Web-Site-Practition...