Beta is one of the most commonly-used measures of a stock’s volatility. Often, beta will be calculated and considered as a way to determine the “safety” of an investment or a portfolio. The idea is that risk exposure can be reduced during a market downturn by investing in low-beta stocks.
The year 2008 was one of the worst for the stock market in history. The S&P 500 fell 37.6 percent, and billions of dollars of stock market wealth evaporated. That scenario is every trader’s worst nightmare and the driving force behind the desire to control portfolio risk.
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Safety in scary times
In a recent article, CNN Money editor Paul La Monica gave his take on the current market conditions: “So now’s the time… to be looking at blue chip, dividend-paying companies that can hold up well during rocky periods for the broader market.” La Monica’s idea is that, when times get scary, portfolios should be built around solid, low-volatility, low-risk stocks.
La Monica quotes Brandywine Global managing director Patrick Kaser, who specifically mentions some stocks that ...
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