- The relationship between risk and return is of fundamental importance when choosing and evaluating a financial investment.
- For generations, investors have believed that risk and return are inseparable, convinced that the higher the returns, the greater the risks.
- I recently read an interesting book that questions this assumption, demonstrating how low-risk stocks beat high-risk ones in the long run.
- The book’s author calls his perspective “the stock market paradox” and identifies three criteria for selecting securities to create a low-risk portfolio: volatility, yield, and momentum.
- I made some interesting discoveries when I applied these criteria to my income portfolio.
For further details see:
My Income Portfolio - The Risk-Return Paradox