It is easy to assume that all investors are good at taking risks. Low Volatility Investments have taught the world that some of the investors are not in it for the adrenaline that comes with risks. They will invest in stocks making little gains as long as their risk is minimized. However, the debate is whether these investments offer the promised returns and whether they are worth it.
LVI are for investors who are not ready to lose any money for whatever reason. This is a reality especially when the market crashes. These stocks are never affected by sudden fluctuations in prices. It means that your losses are significantly reduced. This is why such stocks are dominated by institutions dealing with public monies that would spell doom for the investor if the money was lost.
The slow gain explains why most of the investors in this segment are institutions or people with huge sums to invest. A person who intends to grow his money cannot turn to a stock that offers minimal gains. This is advantageous to such investors because huge investments will produce commendable returns even when the percentage gain is very small. 1 percent on 100 million dollar investment is still substantial. If this was to be a loss on volatile stocks, it would be a huge blow.
Stocks in the LVI market are few and characteristically easy to identify. The marginal change in their prices over years is very thin. This means that they do not lose value by large margins or gain by such margins. The stocks are also cushioned from a lot of market information. For instance, a tech company would see its shares plummet within minutes of regulatory news. However, the price of real estate stocks remains relatively stable even with major announcements.
LVI are not under-performers in all situations. There are instances when the performance is incredible, especially during a bull run. The upsurge is usually due to a rush as investors look for safer havens for their money. It means that at different points, investors who were expected to make the least returns will reap the most. However, this happens in few instances that are also far apart.
Most of the investors in LVI engage in fund hedging by placing their money on such stocks. The most rewarding moment for low volatility investors is when earnings from bonds become less impressive. This is why public fund managers like pension funds prefer such investments. Because of a reduced coverage ratio, these stocks experience incredible stability. Fund hedging in this case is performed indirectly.
There is no secret formula for identifying LVI. You need to study the market over sometime. You will identify a trend in different situations where the performance of particular stocks reacts in a particular way. The most common traders are real estate and companies that are not hugely affected by news items. The most common stocks are real estate and commodity companies that are established as well as deal with mandatory or non-optional goods.
Some financial analysts are of the opinion that LVI is just a theory. This conclusion is based on market changes over years where stocks that were considered to be safe end up causing huge losses to investors through slow bleeding. This means that there is no guarantee for loss or profit. It is a matter of chance, like in every other investment option.
LVI are for investors who are not ready to lose any money for whatever reason. This is a reality especially when the market crashes. These stocks are never affected by sudden fluctuations in prices. It means that your losses are significantly reduced. This is why such stocks are dominated by institutions dealing with public monies that would spell doom for the investor if the money was lost.
The slow gain explains why most of the investors in this segment are institutions or people with huge sums to invest. A person who intends to grow his money cannot turn to a stock that offers minimal gains. This is advantageous to such investors because huge investments will produce commendable returns even when the percentage gain is very small. 1 percent on 100 million dollar investment is still substantial. If this was to be a loss on volatile stocks, it would be a huge blow.
Stocks in the LVI market are few and characteristically easy to identify. The marginal change in their prices over years is very thin. This means that they do not lose value by large margins or gain by such margins. The stocks are also cushioned from a lot of market information. For instance, a tech company would see its shares plummet within minutes of regulatory news. However, the price of real estate stocks remains relatively stable even with major announcements.
LVI are not under-performers in all situations. There are instances when the performance is incredible, especially during a bull run. The upsurge is usually due to a rush as investors look for safer havens for their money. It means that at different points, investors who were expected to make the least returns will reap the most. However, this happens in few instances that are also far apart.
Most of the investors in LVI engage in fund hedging by placing their money on such stocks. The most rewarding moment for low volatility investors is when earnings from bonds become less impressive. This is why public fund managers like pension funds prefer such investments. Because of a reduced coverage ratio, these stocks experience incredible stability. Fund hedging in this case is performed indirectly.
There is no secret formula for identifying LVI. You need to study the market over sometime. You will identify a trend in different situations where the performance of particular stocks reacts in a particular way. The most common traders are real estate and companies that are not hugely affected by news items. The most common stocks are real estate and commodity companies that are established as well as deal with mandatory or non-optional goods.
Some financial analysts are of the opinion that LVI is just a theory. This conclusion is based on market changes over years where stocks that were considered to be safe end up causing huge losses to investors through slow bleeding. This means that there is no guarantee for loss or profit. It is a matter of chance, like in every other investment option.
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