Make Money Using High Beta Stocks

Make Money Using High Beta Stocks

High Beta Stocks are the way to add some aggression in your portfolios. Let me explain you How? Well, see. The Beta is the indicator of the volatility. The Volatility of the Index is by default considered as 1. So the Beta of Sensex is 1 no matter how good or bad it performs.

Now, each stock in the stock market has its own Beta. Now suppose if the beta of one stock is 1.1 and the other is 0.90 than the first stock is 10% more volatility than the Sensex and the second stock is 10% less volatile than the Sensex. And that’s why the first stock will outperform 10% than the Sensex in the up market and 10% downperform than the Sensex in the down market.

And the second stock will perform 10% less than the Sensex in the up market and erode 10% less than the Sensex in the down market.

And that’s why if you think that the stock market will recover in the near future than you can increase the High Beta stocks allocation in your portfolio to make more profit.

This is the Smart Investors’ strategy. And if you are not expert in doing this than please don’t do this. Many smart fund managers generate lots of returns from the portfolios by using this strategy.