Investors want to get the most out of their investment without exposure to risk. Low Volatility Investments are a safe way to put money in stock markets without the risk of fluctuations that reduce the value of your investment leading to losses. This is a defensive way of investing that has been popularized by the recent global financial crisis.
The bottom line is that low volatile investment is only theoretical. It is impossible to pick a stock with certainty until market forces are applied on it over time. Until market forces act on a stock, it can never be marked as less volatile. Stock markets depend on seasons to determine their performance. This means that labeling one as less volatile at the beginning of trading can lead to natural market correction later.
Low volatility portfolio label is not a guarantee that you will not make losses. The unique factor is that these losses and the chances of making such losses are less than for other stocks. It takes years to mark a stock as less volatile. The stocks will still experience moments of bulging and slumps. This means that short term observation will return erroneous results. The stocks only protect you from the drastic gains and losses experience in other portfolios.
LVP stocks give lower returns. It is the reduced exposure that invites many investors into this segment. If an investor loves exposure to risk, there are better stocks with impressive returns. In fact, this is a confirmation of the principle that reduced risks bring lower returns while more risky investment produces better returns.
There is a formula to LVP. The formula that leads to reduction in risk involves the participation of very few players in the stock. Such stock is also not in limelight because it is considered insignificant. Its participation in the market is also on long term basis. This means that every day activities rarely affect its returns. In this light, it is possible to predict the behavior of such a stock over time.
There is money in LVPs for the massive investors. As stated earlier, the returns are usually marginal. However, if your investment is massive, your marginal returns will still be significant. This is why institutional investors find these stocks to be highly attractive. They help them keep their money safely with a guarantee that they will not lose value. Their targets are not immediate returns.
Bullish trading also affects the less volatile stocks. This is a confirmation that the stocks are traded in an ordinary market. These stocks will respond to winds that favor certain stocks and not others. There will be moments of sharp fall and rises which gives investors time to buy and also sell. Such moments do not last long before a correction happens.
LVPs have an almost sure return, the attractive factor about these stocks. When the markets are performing well, the stocks also appreciate. If the entire market is experiencing poor performance, the stocks also fall in value. The only guarantee you get by investing in these stocks is long term stability which will preserve your value in the long term.
The bottom line is that low volatile investment is only theoretical. It is impossible to pick a stock with certainty until market forces are applied on it over time. Until market forces act on a stock, it can never be marked as less volatile. Stock markets depend on seasons to determine their performance. This means that labeling one as less volatile at the beginning of trading can lead to natural market correction later.
Low volatility portfolio label is not a guarantee that you will not make losses. The unique factor is that these losses and the chances of making such losses are less than for other stocks. It takes years to mark a stock as less volatile. The stocks will still experience moments of bulging and slumps. This means that short term observation will return erroneous results. The stocks only protect you from the drastic gains and losses experience in other portfolios.
LVP stocks give lower returns. It is the reduced exposure that invites many investors into this segment. If an investor loves exposure to risk, there are better stocks with impressive returns. In fact, this is a confirmation of the principle that reduced risks bring lower returns while more risky investment produces better returns.
There is a formula to LVP. The formula that leads to reduction in risk involves the participation of very few players in the stock. Such stock is also not in limelight because it is considered insignificant. Its participation in the market is also on long term basis. This means that every day activities rarely affect its returns. In this light, it is possible to predict the behavior of such a stock over time.
There is money in LVPs for the massive investors. As stated earlier, the returns are usually marginal. However, if your investment is massive, your marginal returns will still be significant. This is why institutional investors find these stocks to be highly attractive. They help them keep their money safely with a guarantee that they will not lose value. Their targets are not immediate returns.
Bullish trading also affects the less volatile stocks. This is a confirmation that the stocks are traded in an ordinary market. These stocks will respond to winds that favor certain stocks and not others. There will be moments of sharp fall and rises which gives investors time to buy and also sell. Such moments do not last long before a correction happens.
LVPs have an almost sure return, the attractive factor about these stocks. When the markets are performing well, the stocks also appreciate. If the entire market is experiencing poor performance, the stocks also fall in value. The only guarantee you get by investing in these stocks is long term stability which will preserve your value in the long term.
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