There are two types of risk – individual investment risk and market risk. The typical investor is saving and investing for retirement. Their strategy should be buy and hold because that is how all great wealth was made. Annually they should review performance of individual investments and replace ones that are underperforming.

With a buy and hold strategy you eliminate market risk. You are left with just individual investment risk. Risk adjusted returns are based on both risks. If you look at relative performance over a long period of time, you can add true outperformance to your portfolio.

Diversification for the sake of just having a little of a lot of different investments causes underperformance. You want as many investments as possible that outperform the S&P.

There is a belief that volatility creates more risk. With no volatility there is no return. What you are looking for is the greatest relative performance. That will give you the greatest portfolio performance.

TQQQ is thought to be too risky yet all the outperformance of the Stars model is due to TQQQ. Over the past 26 years Stars outperformed the S&P by a factor of 17. The real risk of Stars is zero because of the high returns. You never have a loss just drawdown.

The good news is that some financial advisors are allowing investors to invest their way.