Is it true that regular index investing performs good result with low risk?

Written by Alexander Korablev

Continued from page 1

We must note that investing into indexes isn't risk-free investment. There are results with loosing in our testing. The poorest result is loosing about 33% of initial investment into S&P 500.

Diversification isrepparttar best way to reduce risk. Investing into 2-3 different indexes can reduce risk significantly. Best results are given by investing into indexes with different types of assets (bond index and share index) or different classes of assets (small caps, mid caps, big caps).

You can find full version of this article with full results of our tests here:

Alexander Korablev is head of FPLab Team. is trainings and courses catalog for traders and investors.

Stop Loss Orders And Where To Place Them

Written by John B Keown

Continued from page 1

Since we are generally longer-term investors, we use 1 or 2, or a combination of both such as 1 forrepparttar initial stop, and then 2 forrepparttar 148014 trailing stop oncerepparttar 148015 position has moved significantly into profit. Just use what you feel most comfortable with.

According to William O'Neill of CANSLIM and Investor's Business Daily fame, a stop of 8% is more than adequate. However, be aware ofrepparttar 148016 different volatility of particular stocks and use your judgement. Also make sure at least that your initial stop is further away fromrepparttar 148017 price. Experiment, and discover your own tolerance for risk.

An unusual system for placing stops I had some success with was to userepparttar 148018 long-term average S&P annual gain of 11% and multiply it byrepparttar 148019 stock's beta, ifrepparttar 148020 beta is greater than 1. Round this number up or down. Simplistic but effective. If a stock has a beta less than 1, just use 11%. CRDN has, as of 07/07, a beta of 1.307. The stop, if we were buying today would be 11*1.307 or 14%.

14% my seem like a lot to lose, ifrepparttar 148021 stock falls after you buy it and hitsrepparttar 148022 stop; in a diverse portfolio, this will not happen too often and you will be protected from having to make a 100% gain to break even. Most discount brokerages allow percentage trailing stops nowadays, and may not even charge for them, giving you peace of mind for free.

(c) 2005 The Graham Investor - Value Investing You may use this article, as-is, provided this copyright notice is kept intact.

John B. Keown is an IT specialist, website builder and private investor who enjoys all things stock-related and in particular seeking out undervalued stocks. He can be contacted via

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