What are some things that I can do to reduce volatility in my investment portfolio?
There are a few things that you can do to help reduce volatility. In order of importance: • Buy more stocks. Any one stock can experience a shock due to company specific information such as earnings, competition, etc… The more stocks that you own, the greater the chance that a negative shock to one stock will be offset by a positive shock on another stock. • Diversify your stock investments among different industry groups. A single industry may experience an industry specific shock. An example of this was the rapid decline among airline stocks after the 9/11 attack in 2001. • Buy stocks that are given higher safety scores by our artificial intelligence models. A higher safety score implies that a company is larger, more stable, has more liquidity, is more profitable, and has good financial strength. • Buy stocks in industries that are given higher safety scores by our artificial intelligence models.
