|About the Book|
Table of Contents:Stock Market Investing - Finding Stock Market Industry BetaInvesting Basics – What Are Your Investment GoalsInvesting For RetirementInvesting And FinancingInvesting Mistakes To Avoid3 Alternatives For Investing For Your Child’MoreTable of Contents:Stock Market Investing - Finding Stock Market Industry BetaInvesting Basics – What Are Your Investment GoalsInvesting For RetirementInvesting And FinancingInvesting Mistakes To Avoid3 Alternatives For Investing For Your Child’s Higher Education Costs3 Reasons To Invest In Dubai Investment Property4 Advantages Of Mutual Fund Investing4 Steps To Real Estate Investing Success!4 Tips To Build A Successful Portfolio5 Pitfalls To Avoid When Searching For Your Next Investment Property5 Steps To Researching A Stock Trade Before InvestingExample from the book:Stock Market Industry Beta is the measure of how a stock’s trading price moves compared with the market as a whole. Knowing this figure one can understand how volatile a stock is. A beta of 1 means a stock’s price fluctuates accurately as much as the market. A beta less than 1 means a stock is less volatile than the market and a beta greater than 1 means that stock is more volatile than the market.Betas could be determined for entire industries also. The “industry beta” would compare the volatility of the industry relative to the whole market. For instance, technology stocks tend to be more volatile than the industry so the beta would be more than 1, typically.To calculate industry beta you need some historical data of the price of the industry stock and historical price data of the entire market. For instance if you were going to calculate beta over the last year for compare technology stocks versus the S&P 500, you would first gather the historical data you need. Next, decide the movements of the two prices after each trading day. This will give a percentage change versus the previous day. Once we have 365 of these we can average the group to decide the average move each made over the last year. We can call the average industry movement Ri and the average market movement Rm. Finally, divide the technology industry’s average movement by the S&P’s average movement and we will have an outcome that is less than 1 (less volatile), 1 (equally volatile), or greater than 1 (more volatile). Written out this function looks like this:Ri / Rm or B = Covariance(Ri , Rm)/ Variance(Rm)Beta could be useable in stock research when judging how risky a stock is versus a stable investment with a guaranteed rate of come back. It must be noted that the longer period of time the beta is acquired the more adequate that beta will be. Also, betas are more valuable when used with stocks that have a long record of high volume trading. Smaller stocks that don’t trade a lot can fluctuate wildly on a busy day and throw the beta out of whack for the period being measured.