Not only does risk have nothing to do with volatility, but Beta is based on historical price volatility.
Looking at Beta as a valuator for market correlation is comparable to looking at charts trying to predict where the stock price is going.
Value investors scorn the idea of Beta - it implies that a stock which has fallen sharply in price is riskier than it was before it fell. A value investor would argue that a company represents a lower-risk investment after falling in price - investors can get the same stock at a lower price to value ratio despite the rise in the stock's Beta following its decline. Beta says absolutely nothing about the price to value paid for the stock in relation to its future cash flows.
Just walk away from Beta, Clayton. If you're seriously thinking about becoming a true long term investor and want to do better than the market, then I suggest you read a lot of books. Books specifically supporting Buffett's investment philosophy. I'd be more than happy to help point you in the right direction. I just hate seeing young blood focusing on the wrong ideas, thinking their investments for the long term will win when in reality their just losing their money to Wall Street.
Beta is a calculation based on past correlation to the market. It cannot measure the future.
Look at beta this way - You can have a high horsepower honda civic, but at the end of the day it has barely any torque. Torque is the true measurement of the engine, the fundamental part of it, while horsepower is just a feel good calculation.
Beta is a joke the real investment world and should never be considered when looking at any individual stock.
If low beta still happens to be your concern after this then I would suggest staying away from individual stocks and to start buying into a Vanguard Index Fund with very low fees.
You'll thank me 30 years from now, Mr. Long Term Inverstor.
I don't want to beat up on you, just point out the obvious. When a stock like KO goes lower and the beta increases, like in Feb/March 09 that doesn't mean that's there's a greater risk to own it. You have to evaluate the business itself and not rely on beta. Beta is a not a risk evaluator.
In cases of great businesses with increasing beta and lower market valuations, you are increasing your Margin of Safety. And if beta increases, so what?
Diversification also does not lower risk, it just increases your probability of having an average return. When your conviction is strong and you wait for the right pitch, you load up on that bad boy and hit a home run. Don't pussy foot around with great companies. Wait for a few to go on clearance and attack.
Over 40B apps have now been downloaded from the App Store, and nearly 20B were downloaded last year, Apple (AAPL) declares. The company adds developer payouts have topped $7B, and that there are over 500M active iTunes accounts (very useful for a mobile payments solution if Apple ever wants to launch one). The App Store still has a big edge on Google Play when it comes to app monetization, though the latter has been growing faster lately. [View news story]
"There are limits. Once everyone has an iPhone, where does further growth come from?"
Where would you like me to begin...
1. New iPhone sales on upgrade cycle 2. Complimentary iPads & Macs from satisfied iPhone customers 3. Apple TVs with Paid Subscription Services 4. Mobile Wallet - Tie your Debit or Credit Cards to your iTunes Account for Global Payments
Apple's Earnings Fall Is Completely Unjustified [View article]
Apple will continue to flourish without him.
Apple's Earnings Fall Is Completely Unjustified [View article]
Apple (AAPL): FQ1 EPS of $13.81 beats by $0.37. Revenue of $54.51B (+18% Y/Y) misses by $220M. 47.8M iPhones, 22.9M iPads, 4.1M Macs, 12.7M iPods. Expects FQ2 revenue of $41B-$43B, below $45.6B consensus. Shares -4.3% AH. (PR) [View news story]
On a comparable basis, earnings for this quarter would be 7.6% more:
$14.86 per share on $58.65B of revenue.
Looks like rock solid earnings to me...
Whisper Number Impact: Apple Earnings Expectations Showing Confidence [View article]
Buffett-Style Valuation Of Apple Inc. [View article]
Apple: Behaviorally, Fundamentally Attractive [View article]
Am I A Dope For Holding Coke? [View article]
Looking at Beta as a valuator for market correlation is comparable to looking at charts trying to predict where the stock price is going.
Value investors scorn the idea of Beta - it implies that a stock which has fallen sharply in price is riskier than it was before it fell. A value investor would argue that a company represents a lower-risk investment after falling in price - investors can get the same stock at a lower price to value ratio despite the rise in the stock's Beta following its decline. Beta says absolutely nothing about the price to value paid for the stock in relation to its future cash flows.
Just walk away from Beta, Clayton. If you're seriously thinking about becoming a true long term investor and want to do better than the market, then I suggest you read a lot of books. Books specifically supporting Buffett's investment philosophy. I'd be more than happy to help point you in the right direction. I just hate seeing young blood focusing on the wrong ideas, thinking their investments for the long term will win when in reality their just losing their money to Wall Street.
Coca-Cola Dividend Raise Will Increase Attractiveness [View article]
KO is a solid ROE investment.
Am I A Dope For Holding Coke? [View article]
Am I A Dope For Holding Coke? [View article]
Look at beta this way - You can have a high horsepower honda civic, but at the end of the day it has barely any torque. Torque is the true measurement of the engine, the fundamental part of it, while horsepower is just a feel good calculation.
Beta is a joke the real investment world and should never be considered when looking at any individual stock.
If low beta still happens to be your concern after this then I would suggest staying away from individual stocks and to start buying into a Vanguard Index Fund with very low fees.
You'll thank me 30 years from now, Mr. Long Term Inverstor.
Am I A Dope For Holding Coke? [View article]
Am I A Dope For Holding Coke? [View article]
In cases of great businesses with increasing beta and lower market valuations, you are increasing your Margin of Safety. And if beta increases, so what?
Diversification also does not lower risk, it just increases your probability of having an average return. When your conviction is strong and you wait for the right pitch, you load up on that bad boy and hit a home run. Don't pussy foot around with great companies. Wait for a few to go on clearance and attack.
Am I A Dope For Holding Coke? [View article]
Do you consider low beta to be low risk? If so, that's the wrong attitude, and you were behind about 12 months on a great buying opportunity.
Over 40B apps have now been downloaded from the App Store, and nearly 20B were downloaded last year, Apple (AAPL) declares. The company adds developer payouts have topped $7B, and that there are over 500M active iTunes accounts (very useful for a mobile payments solution if Apple ever wants to launch one). The App Store still has a big edge on Google Play when it comes to app monetization, though the latter has been growing faster lately. [View news story]
Where would you like me to begin...
1. New iPhone sales on upgrade cycle
2. Complimentary iPads & Macs from satisfied iPhone customers
3. Apple TVs with Paid Subscription Services
4. Mobile Wallet - Tie your Debit or Credit Cards to your iTunes Account for Global Payments
Apple's Cash Hoard Is An Asset, Not A Liability [View article]
Instead, Apple should continue rewarding the long term holder and raise the dividend as they see fit.