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Making Money in a Volatile Market: When Does Beta Really Matter?

|Includes: ABT, Bank of America Corporation (BAC), ED, JPM, KO, MCD, RTN, T, WMT

Domestic economy concerns have been overshadowed by global issues. However, in the near-term as we get closer to the elections and resolution from Europe becomes clearer, U.S. politics and domestic economy will primarily drive the U.S. stocks, signaling further volatility.

To cope with the volatile market, investors find low beta stocks to be their safe haven. The reason is simple – beta measures the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A beta of less than 1 indicates that the stock will be less volatile than the market, while a beta of greater than 1 indicates that the stock will be more volatile than the market.

Although beta is the most popular measure for assessing risk, beta is not free from flaws... Continue reading here.