These guiding principles of investing for beginners are also called the Boglehead Investment Philosophy, named endearingly after John C. Bogle the champion of common sense investing.
at 5:06 WOW! what? Graphics and explanation not clear. You lost me there. But I read "A random walk down wall street" so I know this concept from there. Very good video.
This graph charts the sales of hypothetical Umbrella and Bathing Suit companies vs time, where the weather alternates between rainy and sunny years. Such a perfectly negative correlation doesn't exist in real companies, but this simple example illustrates its value. The bathing suit company sales are twice those of the umbrella company. If both companies convert sales to profits at the same percentage, then owing them 2:1 would give you a constant return. We let volatility, or variability, be a proxy for risk, so by adding the riskier bathing suit company to your umbrella stock holding, you eliminate that volatility. In reality, you don't need a perfect negative correlation. Adding some amount of a poorly correlated security to your portfolio would benefit you as long as they are not perfectly positively correlated (i.e. not already identical). Hope that helps.
Yeah how do you pick stock? And at 50 years old time is still a little on my side but it’s time to get invested in something. Where would the best place to invest 20k ?
