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<p>Chart of the $INDU from 1900 to the present month.</p>
<p>[Dow</a> Jones Industrial Average (1900 - Present Monthly) - Charting Tools - StockCharts.com](<a href=“http://stockcharts.com/charts/historical/djia1900.html]Dow”>http://stockcharts.com/charts/historical/djia1900.html)</p>
<p>If you look carefully at the chart, you’ll see three major bull markets, one major decline and one plateau - this is for long holding periods. Run your eyes over the charts and imagine your results over the long-run. In many cases, the luck of your age has more to do with your results over a long-term buy-and-hold approach.</p>
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<p>Diversification reduces volatility. Most of the time. We’ve had syncronized up-markets and down-markets due to global factors where diversification didn’t matter that much. Diversification also reduces potential returns.</p>
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<p>My approach is to buy with a stop to control losses. I also use a trailing stop. The idea is to sell the tops and buy the bottoms. Professionals use stops. Retail investors usually trade at the wrong time.</p>
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<p>Our government and central bank have been giving away massive amounts of money for the last two years. They do this from time to time and it’s not a bad idea to have your cup out when they drop it from helicopters. Most people just think that it is raining. I’m just wondering how high they get the markets before it drags the retail investor in.</p>