Beta


Beta measures stock's volatility. You can find its beta at fundametal parameters at financial web sites.
If a stock for which you know beta, the percentage change in the stock price should be approximately beta times the percentage change in the market average over a long time period.


For example,
Beta=1
The stock generally moves the same percentage amount as the market average.

Beta=2
The stock generally moves the same way twice as the market average.

Beta=-1
The stock generally moves the opposite way as the market average.


If stocks in your pofolio have beta =1 or beta=2. Stock market was down about 40% from Oct-2007 to Oct-2008.
Your porfolio would be down more than 40%. Your stocks would pass some stop Lost that you had set up. But, The stock market was going up about 20% from Nov-20-2008 to Dec-16-2008.
It means that If you don't have any stop lost for stocks in your porfolio you would save your money about 20%.
About historical data, The market indexes alway go up over a long time period. your good stocks having these betas will beat the markets a long time period. It have been proving at Porfolioes picked by JumpTheFrog. Your problem is how to pick good stocks.

Long-term Investment for good stocks is a important thing. Sell your stocks with good reasons. Moreover, If you choose dividend stocks with high yields then you will be having more shares with cheap prices while the market is going down. you will gain compound value. For example, If You invest $1,000 at a dividend stock 5%, you have $2,650 dividend value after 20 years. It is more than 100% your initial investing value. If you reinvest its dividend and stock's price is going up you will gain a huge value.


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