For Long-Term Investors, the Focus Should Be on Risk
by Paula Hogan and Zvi Bodie
There is a common notion that stocks, at least if held for a long-time, usually outperform other assets, so that stocks should be the cornerstone of any long-term portfolio.
If, when this idea is presented, you protest: “Wait a minute. Stocks are also risky!" the reply is either, "Stocks have done well in the past and so they will probably also do well in the future," or "If you have a long time horizon, you'll do well in stocks."
However, the thoughtful investor must also wonder: “But what if stocks don’t do well? What happens then to my retirement?”
...To continue reading this article you must be registered with AAII.
to read this article and receive access to future AAII.com articles.
Already registered with AAII? Login to read the rest of this article.
Zvi Bodie , Ph.D., is a professor of finance and economics at Boston University School of Management. He maintains a website at www.zvibodie.com..