ARROYO GRANDE, Calif. (MarketWatch) -- Now for the good news from the "Lazy Portfolios" files. While the rest of America is crying about the first quarter 2008 as "one of the worst three months in a decade," we've got eight great portfolios that keep winning in bear and bull markets.

That's right, every one of our eight Lazy Portfolios beat the S&P 500 on all three performance benchmarks -- one-, three- and five-year returns. Every Lazy Portfolio beat the S&P 500's five-year average by at least 0.2 percentage points to as much as 6.2 percentage points, according to research by Morningstar Inc.

This is impressive because not only are their asset allocations rarely changed, but some have been unchanged for almost a decade and still beat the S&P 500.

Get it? These portfolios are virtually "zero maintenance!" Set them and forget them. Plus you can ignore Wall Street's relentless, misleading chatter about markets and the economy. Seriously. After customizing your own Lazy Portfolio you can ignore the news and focus on what's really important: your family, loved ones, friends, your career, hobbies, travel -- you name it -- anything but wasting time tracking and playing the market.

How to set up your portfolio? Easy. Use our six basic rules in customizing your own Lazy Portfolio, beginning with our eight model portfolios below. The rules are simple, all derived from the Nobel Prize-winning "Modern Portfolio Theory:"

Asset allocation outperforms stock picking Compounding builds long-term asset values No-load index funds beat actively managed funds Buy and hold, adding new money from savings Market timing and active trading is a loser's game Trust yourself, you're the expert, do-it-yourself

Sound too simple? Well, that's what Wall Street will tell you: Especially all those brokers, active fund managers and commission-based advisers who love big fat commissions and fees that Jack Bogle says siphon off 30% or more of your returns. They hate Lazy Portfolios even though the evidence consistently proves that this is the best investment strategy for the vast majority of America's 95 million passive investors.

The facts speak loudly. So please review each of the eight Lazy Portfolios below. Especially note that the number of funds in each portfolio varies from three to 11. Note also, their asset allocations vary, with equities ranging from 60% to 90%. And see how they're beating the S&P 500 benchmark on both a short-term and long-term basis:

Portfolio Equity % No. of funds 1-year return 3-year annualized return 5-year annualized return Second Grader's Starter 90 3 -2.30% 8.91% 14.77% Aronson Family Taxable 70 11 0.32 9.33 14.64 Yale U's Unconventional 70 6 -0.42 9.64 14.08 Margaritaville 67 3 3.44 9.47 14.03 FundAdvice Ultimate Buy & Hold 60 11 2.70 9.84 13.98 Dr. Bernstein's No-Brainer 75 4 -2.18 7.94 13.61 Dr. Bernstein's Smart Money 60 9 -1.90 7.46 11.76 Coffeehouse 60 7 -2.63 7.10 11.52 S&P 500 100 n/a -5.08 5.85 11.32

Aronson Family Taxable

Let's start with Ted Aronson. I first learned about Ted seven years ago. His AJO Partners manages $23 billion of institutional assets. During the 2002 scandals Ted headed America's leading professional association for portfolio managers. TheStreet.com called him America's "most honest" manager. Ted's rare among our nation's 70,000 managers: He's tells you exactly where he invests his own money outside his firm. The vast majority of managers won't tell, afraid you'll find out how rich they're getting off you.

Remember, there are over 10,000 mutual funds to pick from. Less than 10% are index funds. So I was amazed that all his funds were indexed, and he only needed 11 to build a well-diversified Lazy Portfolio. Noteworthy: Ted even bought into the first index fund launched by Vanguard in 1976.

At the end of 2007, Ted's equity funds had a five-year average of more than 22%, thanks to his high 40% asset allocation in foreign funds. He cut that back to 30% at the end of 2007.

(The other seven portfolios have remained relatively unchanged, relying on rebalancing to stay close to their model asset allocations. And the best way to rebalance is tying it to your retirement saving program. That is, add new money from your regular monthly savings program to keep your portfolio in line with the original allocations.)

Second Grader's Starter

Aronson's portfolio of 11 funds is usually on top of the leader-board. However, as if to underscore the point that you don't need lots of funds to win, another portfolio edged him out by a nose, on a five-year basis. This is important since every fund has a minimum initial investment and new investors often don't have enough money to buy into 11 index funds.

So consider this "Second-Grader's Starter Portfolio." Kevin Roth was eight years old when we first saw his three-fund portfolio. This quarter he's beating the S&P 500 by about 3 percentage points, once again proving anyone can set up a winning portfolio with just a few funds, and beat the so-called professionals too!

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard Total Stock Market Index 60% -5.79% 6.19% 12.27% Vanguard Total International Stock Index 30% 1.34 15.52 23.18 Vanguard Total Bond Market Index 10% 7.70 5.43 4.53 Portfolio 100% -2.30 8.91 14.77

Yale U. Unconventional

David Swensen is the mega-successful manager of the Yale Endowment Fund. His six-fund portfolio comes from his bestseller "Unconventional Success," where he offers it to average retail investors. Notice that despite a heavy 20% allocation in the real estate sector, which was clobbered by the subprime meltdown, his portfolio still outperforms the S&P 500 by a respectable three percentage points.

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard Inflation-Protected Securities 15% 14.78% 6.71% 6.65% Vanguard REIT Index 20% -17.48 11.64 17.76 Vanguard Long-Term Treasury Index 15% 12.61 7.03 5.98 Vanguard Emerging Markets Stock Index 5% 21.69 27.95 34.96 Vanguard Developed Markets Index 15% -2.52 13.34 21.40 Vanguard Total Stock Market Index 30% -5.79 6.19 12.27 Total portfolio 100% -0.42 9.64 14.08

Margaritaville

Here's more proof you don't need a lot of funds to win big. The equity returns for Dallas Morning News columnist Scott Burns's simple three-fund portfolio also beat the S&P 500 across the board. Even with a whooping 33% of his portfolio in fixed-income securities. This is great news for new investors starting with a small nest egg.

Also, look closely at the three-fund Lazy Portfolios compared to the 11-fund versions. Note: Size does not necessarily mean much bigger returns. In fact, smaller and simpler portfolios may have the "value-added" of increasing your daily "serenity."

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard Inflation-Protected Securities 33.3% 14.78% 6.71% 6.65% Vanguard Total International Stock Index VGTSX, -0.17% 33.3% 1.34 15.52 23.18 Vanguard Total Stock Market Index 33.3% -5.79 6.19 12.27 Total portfolio 100% 3.44 9.47 14.03

FundAdvice.com Ultimate Buy and Hold

Take a moment and check out FundAdvice.com. This award-winning "virtual encyclopedia" offers investors a wealth of information. The guy behind it, Paul Merriman, is on a mission to educate average investors. He does free seminars around the country. And he's got a great upbeat book designed to anyone who wants to "Live It Up Without Outliving Your Money," an appealing theme for every investor.

Here's his winning portfolio extracted from his FundAdvice Web site. We also reviewed several of his other "buy & hold" portfolios in our book, "The Lazy Person's Guide to Investing."

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard 500 Index 6% -5.17% 5.72% 11.18% Vanguard Value Index 6% -9.75 6.15 13.98 Vanguard Small Cap Index 6% -11.24 5.85 15.85 Vanguard Small Cap Value Index 6% -14.84 4.37 15.14 Vanguard REIT Index 6% -17.48 11.64 17.76 Vanguard Emerging Markets Stock Index 6% 21.69 27.95 34.96 Vanguard Developed Markets Index 12% -2.52 13.34 21.40 Vanguard International Value 12% 0.07 15.45 23.86 Vanguard Short-term Treasury 12% 9.96 5.73 3.86 Vanguard Intermediate-term Treasury 20% 14.13 7.30 5.09 Vanguard Inflation-Protected Securities 8% 14.78 6.71 6.65 Total Portfolio 100% 2.70 9.84 13.98

Dr. Bernstein's Smart Money

Both the next two portfolios are from Dr. William Bernstein, a financial adviser, neurologist and author of two bestsellers, "The Four Pillars of Investing" and the "Intelligent Asset Allocator," plus his just-released book, "A Splendid Exchange: How Trade Shaped the World."

We first saw his nine-fund portfolio way back in 2000 in his Smart Money column. It's the same today, a winner in bull and bear markets.

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard Emerging Markets Stock Index 5% 21.69% 27.95% 34.96% Vanguard European Stock Index 5% -0.02 14.76 22.89 Vanguard Pacific Stock Index 5% -7.87 10.39 18.15 Vanguard REIT Index 5% -17.48 11.64 17.76 Vanguard Short-Term Investment Grade Index VFSTX, 40% 5.43 4.88 3.82 Vanguard Small Cap Index 5% -11.24 5.85 15.85 Vanguard Small Cap Value Index 10% -14.84 4.37 15.14 Vanguard Total Stock Market Index 15% -5.79 6.19 12.27 Vanguard Value Index 10% -9.75 6.15 13.98 Total portfolio 100% -1.90 7.46 11.76

Dr. Bernstein's No Brainer

Dr. Bernstein reveals the perfect attitude about long-term investing for any passive investor: "I really don't pay that much attention to these portfolios. I'm comfortable with them in the long run. I'll stick with them." And why not, he's beating the S&P 500 on a one-, three- and five-year basis with absolutely no tinkering, whether it's the nine-fund or this four-fund version from his EfficientFrontier.com Web site.

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard 500 Index 25% -5.17% 5.72% 11.18% Vanguard European Stock Index 25% -0.02 14.76 22.89 Vanguard Small Cap Index 25% -11.20 5.85 15.85 Vanguard Total Bond Market Index 25% 7.70 5.43 4.53 Total Portfolio 100% -2.18 7.94 13.61

Coffeehouse

Same goes for the equity returns of financial adviser Bill Schultheis, author of "The Coffeehouse Investor," which Jack Bogle says is the No. 1 book he recommends to investors.

Here again, as with the Yale Portfolio, the real estate exposure temporarily hurt. Nevertheless, his portfolio is beating the S&P 500 across the board. Moreover, you may recall that the Coffeehouse beat the S&P by 15 percentage points all three years during the big 2000-2002 bear/recession, about the time I first ran across Schultheis's fabulous work on his CoffeehouseInvestor.com Web site.

Fund Allocation 1-year return 3-year annualized return 5-year annualized return Vanguard 500 Index 10% -5.17% 5.72% 11.18% Vanguard REIT Index 10% -17.48 11.64 17.76 Vanguard Small Cap Index 10% -11.24 5.85 15.85 Vanguard Small Cap Value Index 10% -14.84 4.37 15.14 Vanguard Total Bond Market Index 40% 7.70 5.43 4.53 Vanguard Total International Stock Index 10% 1.34 15.52 23.18 Vanguard Value Index 10% -9.75 6.15 13.98 Total portfolio 100% -2.63 7.10 11.52

All data from Morningstar as of March 31

What matters most

The five-year bull's over. Now it's a bear market. An old, old cycle: Bulls follow bears follow bulls ad infinitum. "If the markets have taught us anything the past 8 years, it is to first create a financial game plan and then stay committed," says Schultheis.

"Which index funds are the best? Cap-weighted, dividend-weighted, value-weighted? The debate rages. Will small, value, and REITS come back? Of course. Maybe not this year. Maybe not next. But in the end, nothing matters as much as your asset allocations."

And come to think of it, that's the Lazy Portfolios strategy in a nutshell. Think about our six rules next time you're customizing your retirement nest egg for the long haul.