Can you sleep at night? For some reason, many investing professionals and pundits have a creepy fascination with what happens in your bedroom. Cooked into their recommendations is often the elusive “sleep at night” factor (which, believe it or not, isn’t a primary benchmark determinant—see Bunk 4).
Many people just can’t stomach volatility—wild wiggles make ’em crazy! Give them ulcers and keep them up at night. For those folks, before we consider dooming them to what’s likely a lifetime of lackluster returns, I’d put a few hard questions to them.

Are You So Sure Stocks Are the Problem?

First, do you know bonds can and do have down years? (You do if you read Bunk 1!) Of course, everyone knows stocks had a dreadful 2008, but most folks (who haven’t read this book) don’t realize 10-year US Treasuries were hammered in 2009—down 9.5 percent.1
Second, are you so sure you hate wild wiggles? Folks think of downside volatility as bad and upside volatility as not volatility at all. But it’s all volatility. You like the wild wiggles when they’re up wiggles. It’s amazing how many folks claiming they hate stocks at the end of a bear market—don’t want to hold them ever again—change their tune radically after a couple or three or six years of a bull market and come back to stocks (sometimes just in time to get hammered again). Suddenly, they can’t get enough “risk”—want to load up on it. These folks aren’t risk-averse; they’re myopic—they’re ...

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