There are two problems with the argument that short-term volatility or downside risk should be, in effect, ignored, if emotions are managed. First, the implicit assumption of time diversification or that stocks will come back after a decline. There have been numerous articles in the FAJ, which I believe show, that you can't insure this will be the case. And, of course, in some countries and periods of time the market never came back (i.e. Europe). Secondly, the amount of time until the market comes back (for example, the post 1929 crash) could be beyond the duration (in the bond sense) of many investor's retirement funding liability.