The problem with your post is that the two investment maxims of diversification and asset allocation over the lifetime of just about any investor should produce reasonable longterm gains and provide for a nice retirement nest egg. The caveat of course, is if you were born in 1920 and retiring right now. I could see it being tough to have made large gains going from the Great Depression to the Great Recession, and even then, accounting for inflation, I'm still not sure that someone who put their money into a good mixed basket of bonds, cash, gold, stocks (foreign and domestic) with an element of real estate and commodities should not do well.

Barbara,

If you ever find a better, more stable way to make gains than asset allocation and diversification, then I can make you a trillionaire in a few years. In short, I don't think you are wrong.

I mostly go by David Swensens allocation scheme, that is, 50% equity, 20% real estate, 30% bonds, split between inflation protected and fixed interest.

Differently from him I split the equity portion into lots of different regions, regardless of development status.

Consequently I found it quite entertaining to watch all the nervous money slosh around last autumn. One day Asia was high and the EU down, next day Latin America was up and Asia down and so on. Having had a finger in every pie I didn't lose much sleep over it.

Made some (unrealized) losses anyway, since much money went into the bond market where volatility is much lower.