Is Your Stock About to Tank?

A stock's beta is a valuable metric for helping investors judge their portfolios' volatility.  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [Browser View]( [Wealthy Retirement]( Is Your Stock About to Tank? Marc Lichtenfeld, Chief Income Strategist, The Oxford Club [SHOCKING Confession From USA's #1 Retirement Expert!]( He was HORRIFIED when he accidentally hit the WRONG key on his computer...  [The Wrong Key](  But it unlocked [a hidden GOLD MINE in the stock market]( like we've NEVER seen before. To see this expert's unusual confession, [click here](.  Editor's Note: Sometimes, big profits come in small packages. Below, Marc explains how "beta" - a metric that helps investors judge a stock's volatility - can uncover high-potential, low-cost stocks that might otherwise go unnoticed by the market. Marc discovered this for himself recently. When a typo revealed a special feature on his research terminal, he found an exciting new subset of stocks... Made up of stocks that are so affordable and promising, he calls it "[the ideal income shortcut]("... [Click here]( to see details on what he uncovered. - Mable Buchanan, Assistant Managing Editor ---------------------------------------------------------------  [Marc Lichtenfeld]  Stocks are known to climb a "wall of worry." As stocks rise, investors get concerned that their hard-fought gains could quickly be wiped out by a bad whoosh down in the market. When markets tank, few stocks are immune. But there are ways of determining whether your stocks are likely to get absolutely smoked or simply drift a bit lower. One of the key metrics to look at to figure out how susceptible your stocks are to a drastic fall is called beta.  A stock's beta compares its volatility with the overall market. The market's volatility is always 1. So a stock with a beta of 2 is twice as volatile as the market, and a stock with a 0.5 beta is half as volatile as the market. Theoretically, if the market falls 10%, the stock with the 2 beta should drop 20%, and the 0.5 beta security should decline 5%. The same is true when the market goes higher. A higher-beta stock would be expected to outperform a lower-beta stock in a strong market.  [January 20, 2020: The Day You Get Rich?]( Our research shows something peculiar could happen in just a week. For some folks, it could lead to gains of 1,000% or more in the long run. Others could see their fortunes cut in half. [Click here to see how you can set yourself up to profit.](  The beta values vary, but they do give you a good idea as to how a stock should move in relation to the overall market. The largest decline in the S&P 500 in 2019 was 7%, between May 1 and June 3. Let's look at how a few high- and low-beta stocks performed during that period.  [High Beta Stocks Chart]  You can see in the table that United Rentals (NYSE: URI), which has a 2.7 beta, fell 19.6% when the market dropped 7%. The stock's beta suggests it would have fallen 19%. Freeport-McMoRan (NYSE: FCX) and SVB Financial Group (Nasdaq: SIVB) also performed according to expectations. Of the low-beta stocks, FTI Consulting (NYSE: FCN) has a very low 0.22 beta. During the May 2019 downturn, the stock barely budged. Ellington Financial (NYSE: EFC) also fell less than the S&P. Diamondback Energy's (Nasdaq: FANG) beta is close to 1, and the stock performed in line with the market. Since its beta is a little lower, you might have expected slightly better performance. But it's important to note that beta is not a crystal ball. It is not a guarantee of a certain return. It's more of a guideline. Stocks with high betas can rise during a market fall, and stocks with low betas can slide when the market climbs. Much of that will depend on company news. But as a general rule, beta is a valuable tool to help you understand your risk in the event of a decline. Good investing, Marc P.S. Sometimes, analyzing beta will lead you to discover low-risk stocks that are trading at incredible values... For example, I recently discovered [huge payday opportunities]( in low-beta stocks when I found a hidden feature of my research terminal. These stocks can help investors with any budget net huge gains while taking on less risk than if they had bought an S&P index fund. [Click here]( to learn more.  [Click Here to Comment](  [This Is the #1 Law Marijuana Stock Investors DON'T Know About]( 99% of people buying pot stocks are [doing it wrong (here's why)](. [This new law]( is the only thing they should be focusing on... Along with the "anointed" companies [granted amnesty]( to sell marijuana.  - More From Wealthy Retirement -   [Bond Fund]( [A Dirty Little Secret About Bond Funds]( [A former bond fund manager shares his recipe for success.](  [Grandfather With Grandson]( [Your 529 Questions... 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