View Single Post
  #176  
Old 02-29-2020, 03:24 PM
bdub's Avatar
bdub bdub is offline
 
Join Date: Jun 2011
Posts: 3,713
Default

Quote:
Originally Posted by Dean2 View Post
You may say don't take this as any kind of serious advice, but it is actually pretty good. My only point would be, if the Beta on your overall portfolio of holdings is over 1.3 let alone anywhere near 2, then you have far too many volatile stocks in your portfolio. Most of the Big Canadian Banks have a Beta of 1 or less, as does Enbridge at 1, and TransCanada Pipe is a .76 Beta etc. You need some higher Beta to take advantage of the markets growing but it needs to be balanced with lower Beta stocks to protect on the down side or you might just as well buy the index ETF.
Thanks Dean.
Just a word on Beta. The level of Beta on certain categories of stocks will change drastically during a crisis. Many stocks will see large increases in the level of beta and as a result larger drawdowns than the market. During the GFC the beta on financial stocks increased drastically for obvious reasons. Individual investors typically are slow to react to these changes in beta as the market and individual stocks react to the crisis. Historical beta doesn’t predict future beta when crap hits the fan unfortunately.
__________________
There are some who can live without wild things, and some who cannot. Aldo Leopold
Reply With Quote