The concept of time diversification has been debated extensively. The key question is: Are stocks safer in the long run? In our paper, we argue that even though the variance of total returns increases with the holding period, stocks do become safer. We argue that what is important is the relation of the mean to the variance of annual returns. For example, as the time horizon increases, a high mean and low variance investment, will result in the mean of total compounded returs grow faster than the increase in the variance. At one point, we have an investment with a high meqn return and a larger variance among mostly positive returns._x000D_ We use Monte Carlo simulation to examine the relationships and demostrate that the historical performance of stocks, bonds and t-bills fit the model._x000D_
