Investors are always reminded that diversification is the key to success. But with new theories being expressed this might be a thing of the past. Some believe that portfolio management means sticking to a certain style and one that you know well. But with a few different styles how do you know which one is best for you? In this mini-series we’ll be discussing the different styles and start with the aggressive portfolio.
The aggressive portfolio, or what some people call the basket of stocks, includes the stocks with high risks and potential high rewards. The stocks will own a high beta and sensitivity to the market. Beta sticks that rate highly experience the larger fluctuations that are relative to the overall market. If the stock you own has a beta of 2.0, it will usually move twice as much as the current market.
Most of the aggressive stocks are in an early stage of growth, and hold value proposition that is unique. When building a portfolio of these companies you will need an investor that is willing to explore the market more than normal, as these companies will be unknown to a wide range of people. They can do this by looking online and checking earnings growth. The common sectors to look into are technology though completing research will help before investing.
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