Professional investors know something that most people find impossible to believe: that the threat of scary ups and downs in the markets is by far the best friend of the long-term investor. Why? Because over the long term, stocks have provided returns far higher than bonds or cash.
In the mid-1990s, Norman Berk attended an investment lecture at an AICPA conference in which the concepts of modern portfolio theory and passive investing were explained. In a few words, passive investing means purchasing virtually all the companies comprising an asset class so that your portfolio encompasses the entire financial world.