{"id":478857,"date":"2017-04-28T15:13:47","date_gmt":"2017-04-28T15:13:47","guid":{"rendered":"http:\/\/juniorminingnews.com\/?p=478857"},"modified":"2017-04-28T15:13:47","modified_gmt":"2017-04-28T15:13:47","slug":"the-only-5-stocks-you-need-to-retire-2","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=478857","title":{"rendered":"The Only 5 Stocks You Need to Retire"},"content":{"rendered":"
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By Greg Guenthner<\/a><\/span> <\/p>\n

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This post The Only 5 Stocks You Need to Retire appeared first on Daily Reckoning.<\/p>\n

There are around 8,700 stocks listed on the U.S. market today.<\/p>\n

But what if I told you that you need only five of them to build a lucrative retirement?<\/p>\n

It’s true.<\/p>\n

I’ve been telling you all about the power of a strategy known as trend following over the past several weeks. It’s the same strategy used by high-end hedge funds to generate investment gains for millionaires and billionaires in any market.<\/p>\n

Now I want to show you how a trend following approach can let you stick with just five stocks to earn outsized profits with a fraction of the risk of buy and hold investing.<\/p>\n

\u201cOne of the most beautiful things about using a trend following strategy is that it’s hands off,\u201d explains our trend following maven Jonas Elmerraji. \u201cRemember, the goal of this investment approach is simple: You want to identify big trends when they’re just getting started. So once you figure out what rules identify a trend, you can let the computer do the heavy lifting and tell you what to buy and sell.\u201d<\/p>\n

But that doesn’t mean that you need to crunch those numbers for all 8,700 U.S.-listed stocks. Just a handful will do fine.<\/p>\n

Why so few?<\/p>\n

The idea of buying just a few names is probably foreign to most modern investors. After all, we’ve all had the word \u201cdiversification\u201d crammed into our brain for the past few decades.<\/p>\n

But you can create a well-diversified portfolio with just five stocks. In fact, you can create a better diversified portfolio than most of your neighbors have with just those five names.<\/p>\n

To answer why, we have to think about what you’re actually buying when you buy stocks\u2026<\/p>\n

\u201cThere’s a reason why people lump \u2018stocks’ into a big group,\u201d Jonas continues. \u201cIt’s because, for the most part, all stocks trade the same. We can measure that by figuring out the implied correlation of a group of stocks like the S&P 500. Right now, the implied correlation of everyone’s favorite index sits at 52.24. That means that around 52% of stock moves are happening together.\u201d<\/p>\n

When you buy a handful of stocks right now, around 52% of what you’re buying is going to move together no matter what. You’re buying a lot of the same thing. And buying a bunch of one thing isn’t diversification. In the real world, that’s precisely why almost all stocks fell like rocks in 2008 and why almost all stocks rallied hard in 2009.<\/p>\n

To get real diversification, we need to focus on buying things that have very low correlation with one another.<\/p>\n

Even with low correlations, five seems like too few to protect us from getting hammered if one crashes. The truth is that owning five stocks has only around 6% more risk than owning 1,000 stocks does; ratchet your number of stocks to 10 and you’ve got only 3% more risk from being underdiversified.<\/p>\n

You’re not exactly playing Russian roulette by owning just a handful of names.<\/p>\n

As a trend \u2026read more<\/a> <\/p>\n

Source:: Daily Reckoning feed<\/a><\/p>\n

The post <\/a>The Only 5 Stocks You Need to Retire<\/a> appeared first on Junior Mining Analyst<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Greg Guenthner This post The Only 5 Stocks You Need to Retire appeared first on Daily Reckoning. There are around 8,700 stocks listed on the U.S. market today. But what if I told you that you need only five of them to build a lucrative retirement? It’s true. I’ve been telling you all about […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/478857"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=478857"}],"version-history":[{"count":0,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/478857\/revisions"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=478857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=478857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=478857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}