Volatility & Correlation.

Discussion in 'Trading' started by GarrettKimmel, Nov 11, 2015.

  1. Why should I pay attention to volatility and correlation if I have a 40 year + investment horizon?
     
  2. rmorse

    rmorse Sponsor

    If I had a long term horizon like that I would not be a trader, but an investor. For investors, I think dollar cost averaging is the way to go.
     
  3. For the most part, "dollar cost averaging" only works for (1) short term, and (2) when prices are falling. Otherwise, DCA is just another term for "buy and hold".
     
  4. Your "40 yr horizon" should be.... "trade well for 40 years"...

    That doesn't mean "day trade" for 40 years... rather figure out when it's better to be on the risk and when it's better to be off. Rinse and repeat.
     
  5. rmorse

    rmorse Sponsor

    Correct it is buy and hold, but for a 30 to 40 year time frame, I would not be a stock picker and would choose an index and dollar cost average. Just my opinion.
     
  6. Big risk potential and huge lost opportunity potential in "B&H for 30-40 years".
     
  7. rmorse

    rmorse Sponsor

    Maybe, but trading is not right for everyone. Stock picking is not right for everyone.
     
  8. There is some merit to "capital accumulation via DCA".

    However, we all want to do "well" with our risk capital. My contention, not only as an investor myself but also an ex-RIA, it that one needs "expertise in the markets" to do well (which does not include DCA). Best if one learns it for himself. Next best is get competent help. The difference is not insignificant... it's multiples and magnitudes.
     
  9. Sotnis

    Sotnis

    I've found that a modestly leveraged stock and bond portfolio has higher expected return with lower risk than an unlevered 100% stock portfolio due to the diversification benefits from the correlations of stock and bond returns but this is an advanced concept.
     
  10. The most important aspect of market success... is to "trade well". Easy to say, hard to do.
     
    #10     Nov 11, 2015