Dividends4Life: Hate Risk? You'll Love These 3 Stocks

Hate Risk? You'll Love These 3 Stocks

Posted by D4L | Friday, August 19, 2016 | | 0 comments »

As an investor, you're well aware investing in the stock market carries with it a certain degree of risk. Many investors are well aware of events such as Enron's collapse or The Great Recession, and some even lost money as a result. However, it's important to note these two events are not similar from a risk perspective. The former was a result of company-specific risk -- specifically, outright fraud from an organization. While Enron is an extreme example, the best way to mitigate company-specific risk is to diversify your portfolio across 15 or more investments. That way, company-specific risk from any one investment will not significantly affect your portfolio.

Systemic risk is measured by the common investing metric beta. One way to protect your portfolio from systemic, or entire-market, risk is to buy low-beta investments. Generally, low-beta investments are non-secular companies with dependable, resilient business models. As a result, these investments tend to not be affected by risks in the greater stock market. Here are three such investments: Telecom companies AT&T (NYSE:T) and Verizon (NYSE:VZ) are much less affected by risk in the general market. Dollar Tree (NASDAQ:DLTR) is an example of a company poised to outperform in a tough economic environment.

Source: Motley Fool

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