The road to riches has never seemed easier, with entrepreneurs, mavericks, and young high-tech wizards coining money starting Internet companies. Lost in all the excitement are legions of failed companies and dashed dreams. Similarly, more people are dismissing as quaint the idea that stocks are risky, thanks to the potent combination of a long bull market and statistical archeology showing that stocks appear as safe as default-proof U.S. government debt over the long haul

Yet the essence of investing is uncertainty. For instance, when Western Union was offered the chance to buy Alexander Graham Bell's 1876 telephone patent for $100,000, management declined because the telephone had "too many shortcomings to be seriously considered as a means of communication." Instead, Western Union offered to withdraw from the telephone business in 1879 in return for Bell's promise not to compete with it in the telegraph business. In the 1940s, Thomas Watson, Sr., president of IBM, then one of the world's leading adding machine companies, confidently predicted that, "there is a market for maybe five computers."

Investment risk doesn't disappear with time. Take inflation. It's currently running at around a 2% annual pace. It's a reasonable guess that inflation will range somewhere between 1% and 3% next year. But what will be the rate of inflation in 2010? Want to hazard a guess? How certain are you in your forecast? With the collapse of communism and the embrace of freer markets by much of the developing world, U.S. investors are pouring money into emerging stocks markets these days. Yet which countries will enjoy political stability and the rule of law two decades from now and which ones will have descended into chaos and banditry? China? Malaysia? Brazil? Venezuela? "You have a pretty good idea of what is going to happen a minute from now, the rest of today, tomorrow, and possibly the rest of the week," says Peter Bernstein, economist, investment advisor, and philosopher of risk. "As the time horizon expands, uncertainty increases because the range of possible outcomes widens as we look further and further into the future."

Now consider the money mantra of the 1990s: Invest in stocks for superior long-term performance. Yes, since 1946, stocks have had average annual returns of 7.5% and bonds 1%, after adjusting for inflation. Stocks are a terrific investment, and equities should form the foundation of any long-term portfolio. Nevertheless, how sure are you that bonds will continue to lag so far behind stocks in the performance sweepstakes? Burton Malkiel, a professor of economics at Princeton University and author of A Random Walk Down Wall Street, puts it this way: "What was a poor investment over the past 60 years will not necessarily be one over the next 60."

Contrary to the prevailing sentiment on Wall Street, the longer your time horizon the more important it is to create a portfolio with a margin of safety by including a lot of different assets, from cash to international equities. "Diversification is still the optimal strategy for the long run," says Peter Bernstein.