One of the central tenets of investing - one that financial planners repeat endlessly - is that risk and reward are positively correlated.
That means that in order to increase return, one must be willing to incur more risk. Conversely, in order to reduce risk, one must be willing to forfeit some return.The majority of the very risky newsletters do not produce returns that are even as good as their conservative brethren - must less the significantly higher returns needed to compensate followers for the many sleepless nights.
[R]egardless of your opinion of the stock market's prospects, you should follow strategies that are near the conservative end of the spectrum.
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?”
And in this self query, the more appropriate approach becomes clear: It makes more sense to think first about what risk you are able and willing to bear, and then to think about what potential investment returns you might be able to capture.