High returns from low risk: a remarkable stock market by Pim van Vliet

By Pim van Vliet

Believing "high-risk equals high-reward" is retaining your portfolio hostage

High Returns from Low Risk proves that low-volatility, low-risk portfolios beat high-volatility portfolios arms down, and indicates you the way to exploit this paradox to dramatically enhance your returns. traders frequently view low-risk shares as secure yet unprofitable, yet this outdated canard relies on a incorrect premise; it fails to work out past the per 30 days horizon, and ignores compounding returns. This booklet updates the pondering and brings truth to modelling to teach how low-risk shares really outperform high-risk shares by means of an order of significance. effortless to learn and simple to enforce, the plan provided the following may help you build a portfolio that offers larger returns according to unit of probability, and explains how one can in achieving very good funding effects over the longer term.

Do you continue to think that traders are rewarded for bearing danger, and that the better the danger, the larger the present? That previous axiom is maintaining you again, and it's time to commence seeing the complete photo. This e-book indicates you, via deep ancient simulation, tips to attain the rewards of smarter making an investment.

  • Learn how and why low-risk, low-volatility shares beat the market
  • Discover the formulation that outperforms Greenblatt's
  • Construct your individual low-risk portfolio
  • Select the appropriate ETF or low-risk fund to control your money

Great returns and decrease danger sound like a profitable blend — what occurs as soon as everyone seems to be doing it? the great thing about the low-risk method is that it maintains to paintings even after the ambiguity is well known; long term funding luck is feasible for someone who can shake off the entrenched knowledge and cross low-risk. High Returns from Low Risk offers the evidence, version and technique to reign on your publicity whereas raking within the profit.

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Extra resources for High returns from low risk: a remarkable stock market paradox

Sample text

The performance of the overall market (an index like the S&P 500 or MSCI World, for example) is their benchmark. And most of the time they have every reason to do this. If your portfolio generates the same returns as the market, but has a high level of relative risk, you would probably be better (and cheaper) off by just buying an index fund which just tracks the market. What’s more, as an investment professional you run an extra type of risk if you select a ‘high relative risk, same return’ kind of investment for your clients.

After all, if value investing is already a proven concept in itself, it makes perfect sense to buy cheap, lowrisk stocks rather than expensive ones. But which kind of value characteristics should we focus on? In order to answer this, let’s first take another step back. Let’s think about the reason why investors generally buy stocks. They buy the shares of companies to receive ‘something’ in return: a capital gain (if the stock price appreciates), a dividend, or both. The first academic study which proved that a value approach gives high returns was done by Sanjoy Basu in 1977.

Eugene Fama, Andrei Shleifer, and Rob Arnott also promote value investing and their theories appeal to investors with an interest in academic research and evidence-based investing. 1 B u y T h e m C h e ap an d t h e T rend is Y o u r F r i e n d [ 6 1 ] based on its fundamentals. Once they return to favor, their share prices rebound and value investors make a decent return. It’s the concept of buying 1 dollar’s worth of value for 60 cents and having the patience to wait for those 60 cents to bounce back to at least 1 dollar.

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