QUOTE(Pink Spider @ Sep 13 2012, 06:49 AM)
U guys
Pls understand the meaning of "risk"
Risk simply means, the magnitude and possibility of losses.
Lower risk simply means, when u lose,
more likely than not u will lose little, similarly, when u profit,
more likely than not u will profit little.
U buy 1-2 stocks on your own, if u get it right, its very rewarding. Similarly, if u picked laggards/big time losers, u will lose money even when the general market is goin up.
The more stocks u buy, the more likely ur returns will be similar to that of the index.
Yes, but personally I do not dare to say UT is low risk investment.
More stocks means average out, while individual that has sufficient fund also can buy 10-15 stocks like fund managers do.
Added on September 13, 2012, 10:23 amQUOTE(xuzen @ Sep 13 2012, 09:58 AM)
Cherroy, UT is a collection of individual stocks and the formula for the portfolio risk aka variance is (W1.R1+W2.R2+....Wn.Rn)^2. Where W is the weightage and R is the stock return.
When you expand the equation, the Std Dev is average of all the weighted components. This is to prevent one from picking the losers but also it prevent one from picking th winner. Hence, from a risk management point of view, this risk trade off with return is an acceptable gamble.
On one hand, the fund manager for Pub-Mut China esp PCSF fund should be dragged out to the courtyard, shot, hung, drawn and quartered (an English Idiom) for the cold blooded murder of their fund. How can one, when actively managing the fund, perform below the benchmanrk i.e. the baseline. Stupid fund manager.
Xuzen
Yes, I understand, just I do not agree the term being put on UT as "lower risk". It can give wrong impression to newbie in investment.
UT has exposure to stock market, when stock market is viewed as high risk place, then UT also does, just return/loss of UT is averaged by total number of stocks holding instead of one or two stocks.
If UT is lower risk investment class, it shouldn't be having a performance of loss 30-40% after 4-5 years.
Added on September 13, 2012, 10:26 amI give a simple scenario.
I bought stock A - high risk
I bought stock A + B + C + D + E. Does it means now I am at low risk?
This post has been edited by cherroy: Sep 13 2012, 10:26 AM 
Sep 11 2012, 02:42 PM
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