About thirty years ago , statisticians armed with all their statistical theories began to confront the financial markets. A handful of useful tools emerged that the average investor should know when they look at buying shares .
A secret that people "in the know " use " BETA " . " Beta " is a number that indicates the relative share of the market has been . However fleeting This number is also listed on most services offer so it is easy to get , but I often find that it is never defined . A BETA of 1.00 means that on average a stock has historically attuned to the markets swings both on the top and at the bottom . A BETA greater than 1:00 reflects above average market volatility , and a BETA of less than 1.00 indicates below average market volatility . When a BETA is less than zero , it shows that the stock moves in contrast to the general market , is in bull markets and increasing in the market bear .. It used to be that gold mining stocks would have negative betas . For example, Internet stocks have high betas .
Many of the analysts who stabbing your TV screen and recommendations BETA use as their primary screening device in the search for suitable investments . So the next time your broker calls with an investment recommendation , ask him what the BETA and enjoy the silence on the other end of the telephone . Send him a copy of this article !
Dowjonesfully ,
- Harald Anderson
Harald Anderson is the founder and Chief Analyst of eOptionsTrader.com a leading online resource of Options Trading Information. He writes regularly for financial publications on Risk Management and Trading Strategies . His goal in life is to become the kind of person that his dog already thinks he has become
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