The trouble with good stocks...

Article Abstract:

Investors may seek to select stocks likely to see price rises of more than the market as a whole, but forecasting is not easy, and this approach could involve selecting stocks that move in the same direction. Better risk management involves seeking stocks that do not move together. Higher risk levels may have to be accepted in order to achieve higher rates of return. Lower risk levels can be achieved, but expected returns are also likely to be reduced.

Risk (Economics)

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The art of managing luck

Article Abstract:

Investors can diversify when they build up portfolios, so that some stocks are likely to perform well if others perform badly. This involves selecting stocks with a low covariance, and helps to reduce risk levels. Stocks with low variances, that tend not to fall far when they do fall, also help to reduce risk. Efficient portfolios maximise returns for specific risk levels, but errors are possible, and historical covariances and variances may not help in forecasting future risks.

Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, Exchanges, Risk management

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Going down - the trouble with defensive stocks

Article Abstract:

Defensive stocks are stocks that have tended not to respond much to changes in the market as a whole, so are less likely to be affected by major price falls, and should rise in prices rise as a whole. Stocks do not always perform as expected, however, and some stocks classed as defensive may see stock price falls of more than those in the market. Other stocks often seen as risky, may perform well, as has been the case with certain telecoms stocks and bank stocks.

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