The once-enshrined investing maxim that there’s no high reward without high risk is getting a serious rethink these days from both finance academics and stock market investors. As I noted earlier this month, the conventional wisdom that volatility creates attractive investing opportunities isn’t always the case if you examine the historical data.
According to a report (.pdf) by Wells Capital Management published last month, the market has seen long stretches-- between 1992 and 1996, or between 2003 and 2007—when stocks performed well yet volatility was relatively low. Right now, we are in one of these relative periods of calm:
- LakeView's High Dividend, Low Volatility model, which holds stocks and ETFs that produce above-market average dividends while exhibiting below-market average volatility. Its current indicative yield is 4.72% (as of 3/20/13, data from Bloomberg).
- Robert Zingale’s Covestor Volatility Mean Reversion model. In his latest commentary, Robert outlines his trading strategy should the market become more choppy in the months ahead.
Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.The post Calm down, everyone: Low volatility investing strategies are killing it appeared first on Smarter Investing.
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