Why Volatility In Your Stock Portfolio Will Help You Build Wealth
Volatility Equals Risk is an Investment Myth Propagated by Global Investment Firms
Most financial consultants when they speak of your investment portfolio mention a low beta as a positive attribute. In fact, you will hear many wealth managers stress the need of having a beta close to 1.00. Beta, in simple terms, is the measure of a stocks or portfolios volatility as compared to the volatility of the stock market index as a whole. So if you owned a stock with a beta of 1.30, it would be about 30% more volatile then the market index.
Ive often seen the beta coefficient used interchangeably to define the risk inherent in a portfolio. For example, people will say if the beta of your portfolio is much greater than 1.00 then you have an aggressive, risky portfolio and if the beta of your portfolio is much less than 1.00 then you have a conservative portfolio. This is nonsense.
First of all, the beta coefficient is determined using the domestic stock market index as the constant. For example in the U.S., the beta coefficient will be determined by comparing the volatility of a stock or stock...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
