For example, you are often told it’s less risky to invest in stocks when you are young because if the stock market drops you have years to make it up. This is what financial economists call the “fallacy of time diversification” because that assumption is wrong. It is true there’s a good chance the market will recover in a decade or two; often time will wipe out a big loss. But that does not necessarily mean there’s less risk, because twenty years of investing means there’s also the possibility of twenty years of bad returns. If you are only investing for two years, that possibility doesn’t
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