Do low -
volatility strategies work for all stocks?
Not exact matches
Selling
volatility is a dangerous
strategy if you don't know what you're doing and even more so when you don't know how the fund you're investing in
works.
I want a stock with low
volatility because the
strategy works best when there is minimal vacillation in the underlying stock.
To the extent that an individual investor can ignore this
volatility, the
strategy will
work very well.
So do many other
strategies that
work off accounting quality, distress, neglect, company quality, low
volatility, etc..
That said, the switching
strategy isn't bad, and seems to
work well in high
volatility environments.
So while you could end up with a larger nest egg by stinting on saving but shooting for higher returns than by investing less aggressively and saving more, you could also end up with a smaller one if the increased
volatility that comes with a more aggressive investing
strategy works against you and returns come in lower than expected.
You don't need an annuity to stretch your IRA, but a fixed annuity does
work well with this
strategy because it fully protects the principal from market
volatility, and provides contractual guarantees.