The stellar investment returns of the 1990s made some investors understandably overconfident. Only a handful of investors have been able to consistently beat the market over long periods. Your chances of becoming one of those few are about the same as your chances of winning the lottery. Of course the part that no one likes about diversification is that some of your investments will be losers at any given moment. The tech stock debacle of the last several months wiped out the investments of many a family hoping the high-stakes gamble would result in a bigger home or a more secure future.
Stocks are simply too volatile to finance wants and needs that are only a few years away.