VOLATILITY – WHY IT MATTERS

Controlling portfolio volatility is as important to investment returns as stock selection. Here’s a quick way to understand why.

Consider the following choices, representing portfolio returns over two years. You can choose one of the following portfolios to hold for a two year period, starting right now:

Portfolio Year 1 Return Year 2 Return Total 2-Year Return Winner ?
A +19% -16% ?
B +10% -9% ?
C +5% -4% ?

Check Your Answer

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