The Diversification Myth
Buying a wider variety of stocks won’t decrease risk much if their prices are closely correlated
The Diversification Myth
Fundamental Intelligence
Getting smart about these AI stocks begins with an understanding of the basics Be smart picking stocks in the artificial intelligence sector by considering the fundamentals of 12 popular AI companies. That’ll require reviewing market capitalization, implied volatility and price/earnings (P/E) ratios. Smaller companies—the ones with less than a few billion dollars in … Continued
Good Pharma Karma
The healthcare sector is set to contribute to your bottom line The market downturn has been kind to the healthcare sector. The S&P 500 (SPY) dropped 16% since the beginning of the bear market, while the Health Care Select Sector SPDR Fund (XLV) decreased by only 4%. The healthcare sector appears to be acting like … Continued
Affordable Futures
Retail investors can use new smaller futures contracts to hedge their portfolio bets Hedge fund managers and other big investors have been using futures to reduce risk for years, but until recently the size of these products has prevented smaller investors from taking advantage of them. Not anymore. Now, futures have become available to even … Continued
Six Traders, Six Trades
A trading committee offers long- and short-term strategies for the new year Tony “BAT” Battista Bullish investors looking to take a long-term view could consider a very wide broken wing butterfly. It’s for traders with accounts of more than $100,000 who are looking for a risk-mitigating position. The potential payoff is $10,110, while the max … Continued
2 Trades for the Cautious Gold Bug
Here’s how investors can make money from the glittering precious metal, even when it’s declining in value Many in the financial world think of gold as a safe investment and a counter to the overall stock market. But as equities decline and the economy shows signs of weakness, gold isn’t increasing in price. Instead, it’s … Continued
Home in on Cyclical Stocks
Use a counter position to take advantage of the volatility of equities that move with the market
The Blunt Truth About Pot Stocks
Cannabis-related stock prices are falling as the nation awaits federal decriminalization After the 2020 U.S. presidential election, cannabis stocks reached new highs as the nation waited for President Joe Biden to fulfill campaign promises to decriminalize cannabis and pardon nonviolent offenders. When that didn’t happen, cannabis stocks began falling to new lows. Although the S&P … Continued
6 Looks at Energy Stocks
Crude oil prices of more than $100 a barrel are boosting stock prices in the petroleum sector, but the effect on the S&P 500 is limited because the commodity accounts for fewer than 5% of the companies in the index. Many portfolios are heavily invested in the S&P 500, so a lot of traders have … Continued
Hype and Skew
Hyped-up stocks can have unusual option pricing with atypical option skew Look at prices of the Nasdaq ETF (QQQ) out-of-the-money (OTM) strikes for the April 14 expiration. They’re highest at the current price of QQQ at 345 and get lower the farther out-of-the-money the strikes are. Now notice that the 15% OTM put is 5 … Continued
