The goal for investors in all fields is to make the most profit with the least investment. This is why an investor will turn to low volatility investments because they are immune to sharp falls and fluctuations in prices. Such fluctuation eats into the profits of investors and reduces their value in the market. This defensive investment approach became popular during the 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.
LVP or low volatility portfolio does not eliminate the potential to make losses. It will only reduce the percentage or speed at which you make a loss. The trend of loss and profit is only calculated by observing years of trading. With reduced risk, your profits in the long run will be better. Short term market forces only lead to a bulge or slump after which a correction takes place. You are only saved from drastic losses but the future is still unpredictable.
LVP stocks will definitely produce lower returns. The basic market principle is that risky investment always produces incredible returns while less risky investment will give impressive profits. The reduced exposure to risk means that your returns will also be reduced. You must be aware of this scenario when making your application.
LVP stocks are easy to identify in the market through specific characteristics of a formula. There are pointers that these stocks are exposed to lower risk. These stocks and their operations are rarely on news items because their operations are not too active. Participants also invest for long term gains instead of short term. This means that behavior can only be predicted with a long term view.
LVP require massive investments in order to realize profits. Notably, the most common investors in LVP are institutions that seek to minimize exposure of their funds. They also know that they will get sure returns because these stocks are not volatile. They have the patience to wait for years before cashing in on such investment. In most cases, they are not interested in immediate returns.
When the market is bullish, LVP will also be affected. This indicates that the investment is still in a normal market. Trading winds still affect the stocks. However, the falls are only sharp and bulges slight with correction helping to restore the value of these stocks.
The sure returns guaranteed by LVP are the reason most investors go for the stocks. If the entire market is performing well, these stocks will also perform well. When the performance is poor, the LVP will also experience a downward spiral. The only saving grace with these stocks is their long term stability that almost assures investors of profits, albeit at a reduced rate.
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.
LVP or low volatility portfolio does not eliminate the potential to make losses. It will only reduce the percentage or speed at which you make a loss. The trend of loss and profit is only calculated by observing years of trading. With reduced risk, your profits in the long run will be better. Short term market forces only lead to a bulge or slump after which a correction takes place. You are only saved from drastic losses but the future is still unpredictable.
LVP stocks will definitely produce lower returns. The basic market principle is that risky investment always produces incredible returns while less risky investment will give impressive profits. The reduced exposure to risk means that your returns will also be reduced. You must be aware of this scenario when making your application.
LVP stocks are easy to identify in the market through specific characteristics of a formula. There are pointers that these stocks are exposed to lower risk. These stocks and their operations are rarely on news items because their operations are not too active. Participants also invest for long term gains instead of short term. This means that behavior can only be predicted with a long term view.
LVP require massive investments in order to realize profits. Notably, the most common investors in LVP are institutions that seek to minimize exposure of their funds. They also know that they will get sure returns because these stocks are not volatile. They have the patience to wait for years before cashing in on such investment. In most cases, they are not interested in immediate returns.
When the market is bullish, LVP will also be affected. This indicates that the investment is still in a normal market. Trading winds still affect the stocks. However, the falls are only sharp and bulges slight with correction helping to restore the value of these stocks.
The sure returns guaranteed by LVP are the reason most investors go for the stocks. If the entire market is performing well, these stocks will also perform well. When the performance is poor, the LVP will also experience a downward spiral. The only saving grace with these stocks is their long term stability that almost assures investors of profits, albeit at a reduced rate.
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