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I wanted to share an updated version of one of my absolute favorite charts, from our friends over at NovelInvestor. It’s always instructive to get a nice visual reminder of the value of diversification. As you can see, very rarely does the same asset top the charts multiple years in a row and it’s quite common for them to be hammered right after a banner year. It’s really difficult to pick the best performing asset year after year. For most of you, particularly those of you with day jobs, STOP TRYING.
Over the long-term the swings work out. Focus on your savings rate, income levels, expenses, and big wins. Those are going to do you a lot more good long-term than trying to win the asset game against the pro’s. If you do want to pick stocks, make sure your focused on value investing in rock solid, long-term holdings, and then ignore those day to day, month to month and year to year.
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