Find new investment opportunities based on Market Sentiment Indicator. Manage watchlist risk with leading indicator of volatility See what influential analysts and investors are saying about stocks in your watchlist
Find new investment opportunities based on Market Sentiment Indicator. Manage watchlist risk with leading indicator of volatility See what influential analysts and investors are saying about stocks in your watchlist
Ron.Moss
Ron.MossExpertise in identifying undervalued companies with strong growth potential. Proficient in conducting thorough financial analysis and market research. Skilled in developing investment strategies that align with clients goals and risk tolerance.
All investments carry some level of risk. To determine whether your portfolio is appropriate for the level of risk that is appropriate for you, first check the maximum loss you are willing to accept, and only then find out whether the portfolio's components comply with the rules you have established.
Many investors assess the level of risk in a given investment based on only one criterion: its stock exposure. However, it has been discovered that this approach, while relatively common, is incorrect and may even harm your all investment portfolio.
Stock exposure is an index for assessing risk, but it is only one of many. For example, a portfolio with 100% exposure to stocks but diversifying in a large number of markets, sectors, and stocks with low correlation between them to achieve maximum diversification, and a portfolio with a limited number of bond series with high levels of risk.
Perform the examination at the level of the individual investment component - and not only at the level of the investment channel. The advantage is that we look at each investment on its own, and not generalize. The disadvantage is the complexity required to perform the examination on a large number of components in the investment portfolio, especially in light of the fact that we aim to spread the investment portfolio as much as possible.
Viewing the historical performance of the various components of the portfolio. However when examining bonds in a low interest rate environment with an expected increase, the potential for capital losses is higher.
Even before examining the portfolio's composition, the best way to determine the appropriate level of risk for us is to determine the amount of the maximum loss we are willing to absorb.
It is critical to remember that the risk of loss in an investment portfolio is almost always present. Even if we have a strong belief in the investment and believe it is the best. The greater the potential return, the greater the risk. This holds true for all investment components, not just stocks, as is commonly assumed. A long-term government bond, for example, can provide a higher return than a short-term government bond, but it also has a higher loss potential.
After we have defined our risk limit, for example, a maximum loss of 4% per year, we will approach the investment portfolio and examine it in accordance with the highlights mentioned earlier. If the loss potential is higher than the maximum limit we have set for ourselves, we will make adjustments in our investment portfolio.
The most important thing is to adjust the various investment components in the portfolio to our risk profile, rather than assuming that the market will always rise or trusting that we will be able to identify market trends in real time. History shows that when a market falls, it usually falls quickly, and those who are unprepared will have a difficult time making the necessary corrections in real time.
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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.
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Disclaimer: Past performance, whether explicitly stated or inferred from historical testing of methodologies, does not serve as an assurance of future outcomes or achievements.
The displayed outcomes pertain to a strategy not historically accessible to investors and do not epitomize the returns achieved by any specific investor. The Readiness Indicators, Sentiment Indicators, and aggregate score derive from a model retrospectively applied to historical data. This model is founded on assumptions intrinsic to its construct, which may remain unverifiable and expose stakeholders to potential losses. Engaging in active trading may not be advisable for individuals possessing limited financial resources, restricted investment or trading acumen, or a conservative risk profile.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
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