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% | ? |