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Anonymous
Leverage.
2016-02-23 05:08:48 Post No. 1106807
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Leverage.
Anonymous
2016-02-23 05:08:48
Post No. 1106807
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Whether you invest or speculate, everyone uses some notion of risk.We like to choose our risk.
But when someone buys an all stock portfolio, they could reduce risk (in the Markowitz/modern portfolio theory sense (so volatility of the market value might be used)) by buying bonds or holding more cash, possibly at the expense of growth. You could use the 'fundamentals' notion of risk, in a Ben Graham sense, where you take debt into account etc)
Or they could take on a bit more risk with leverage. Or people could use derivatives to change risk or speculate.
What do people here do? Do you buy stocks and assume whatever risk is associated? Do you use bonds/cash/derivatives/leverage? I'm interested in what you do.
I ask because I understand the theory of derivatives, some of the mathematics of risk and would like to maybe use them.
