Smart money

PUBLISHED : Monday, 18 June, 2012, 12:00am
UPDATED : Monday, 18 June, 2012, 12:00am

The best sites for understanding volatile markets:

Most individual investors are perplexed by the technical explanations of volatility. It is counterintuitive for most people to buy when prices are falling. This site discusses how the current market uncertainty can present opportunities.

Today's market volatility is scaring investors. Back-testing is a method to subject your portfolio to historical volatility data to see how much you could lose. Sophisticated ETF investors running complicated, global portfolios and trading positions need to understand how 'what if' scenarios might affect their returns. Tools allow investors to find, test and execute a process for gaining exposure to up-trends while testing the effect of downturns. Performance summary tables allow you to build a hypothetical portfolio and study volatility for many asset classes, such as international equities, US treasuries and corporate bonds.

Novice investors need to learn the basics about what market volatility means and how it affects their portfolio. Most financial sites won't slow down long enough to teach the basics about it. While this site offers a wide range of investment advice, its section on '5 Ways to Reduce Investment Volatility' counsels investors with sensible strategies that can help keep volatility at bay. Stay away from sector funds like gold and oil if you want to reduce wild price swings. Stick to highly diversified funds to smooth out peaks and valleys. Learn the basics about market timing strategies to reduce long-term risk.


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