Friday, July 25, 2014

How to Reduce the Volatility of Your Stock Portfolio, in Five Words

It's easy: don't look at the prices.

I was reading a piece about investing in farmland. The measured volatility of returns on land investments is very low compared to stocks, because you only get prices for land when you appraise it. And you don't do that very often.

Hence, my idea, which is surely worthy of a Nobel Prize, or at least a MacArthur Foundation genius grant, on how to reduce stock market volatility.

Of course, you can afford not to look only if you have not taken out a margin loan. (And that is one more reason not to take out a margin loan.)

I'm not going to hold my breath waiting for the call from Sweden.