I've actually never followed Howard's fund selections for my portfolio. By the time I learned of the 401(k) Optimizer, I no longer had a 401(k), but I did have a variable universal life insurance policy. Howard was able and willing to analyze and make recommendations on the funds in there as if it were a 401(k), but their fund selection process explicitly excluded sector funds, leveraged funds, & inverse funds (all of which were available in my VUL). I wanted to be able to use those funds, so I didn't rely on Howard's fund selections. But I kept the 401(k) Optimizer anyway because I wanted access to the Buyline, which is a defensive mechanism designed to help people get out of the way of a meltdown in the stock market. I like to apply such defensive indicators when investing long-term in stock market indices like the S&P 500 & NASDAQ 100. (For individual company stocks, I prefer trailing stops as a defensive mechanism.)

As for Howard's fund selection process for a 401(k) (which typically won't offer the kinds of "exotic" funds available in my VUL), I don't remember any of the specific criteria, except that they exclude target date funds & lifestyle funds. I think the 401(k) Optimizer is a good, low-cost solution for someone who wants their workplace plan to be on autopilot. But for someone with your level of technical expertise, I'm not sure Howard's fund selection process would add value to what you're already doing.

By the way, I agree with you that these days, the degree of correlation between asset classes makes diversification at the strategy level critical.