I've ranted before that any asset is only worth the price you pay for it. There is no such thing as a free lunch, and those who thought there was now make up the numbers in the foreclosure listings. But since I'm way too busy writing that epic called a dissertation (seriously, at times it does feel like one!), I'll leave you with this one great article from the one great magazine called the Economist. An excerpt (emphasis added):
Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School examined the record of 16 stockmarkets which were in continuous operation over the course of the 20th century. In itself, this selection showed survivorship bias by excluding the likes of Russia and China. The academics found that only three other countries could match the American record of having no 20-year periods with negative real returns. Other investors were far less lucky. Japanese, French, German and Spanish investors all suffered instances where they had to wait 50-60 years to earn a positive real return; in Italy and Belgium, the waiting period stretched to 70 years. It was no good following the famous advice to “put the shares in a drawer and forget about them”; the furniture would not have lasted that long.
My point isn't to stay away from stocks. It's just that stocks appear kind of pricey to me. If not for some special circumstances, I'd probably invest mostly in high quality issues, or better yet market-neutral funds which invest in these issues (actually about half my money is in one such fund), and overweight TIPS and cold hard cash (paying attention to yield, of course)