I went to school for finance. Investing experts are always hoping to find the elusive mathematical equation that permits investing with NO RISK and a HIGH RETURN. I have studied the experts' theories and the Nobel Prize winning Modern Portfolio Theory which states that a higher rate of return should be commensurate with those investors who take a greater risk.
But new study, which surveyed stocks from 1990 - 2011 and recently published found that less volatile stocks produced greater returns than stocks with more volatility.
Let me say this again: less volatile stock investments outperformed volatile stocks by an average of 17 percent. Less volatility in this study produced BETTER results for investors.
The researcher was quoted in a professional journal that in every world market this math proved true. Less vacillating resulted in higher stock returns for investors than choosing investments with a more sporadic nature. Changeability is not a characteristic that, according to these findings, is a benefit in your stock research.
Investments in the least volatile 10% of stocks produced better returns than the AVERAGE stock return and much better than the most volatile 10% of stock investments.
This is sea change from highly regarded investment theory which states that risk is rewarded with a greater return.
What does this mean for you? There is no math theory that will only make money for your investments. No equation for only good news and not bad. And every time we think we have the magic answer, we find another glitch or a better way.
You discover YOUR risk tolerance, YOUR goals and objectives, YOUR time horizon, and do what's best for YOU.
Citation:
See email, below with the link I hope. Otherwise, here's the link:
Marion Syversen, MBA
NorumbegaFinancial
207.862.2952
Marion@NorumbegaFinancial.com
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