Portfolio, risk and behaviour
Plain-English guides with worked examples: how to read financial statements, value a business, use technical indicators and manage risk. See the complete Financial knowledge series →
All 142Market basics 15Trading and market structure 15Reading financial statements 15Ratios and business quality 15Valuation 15Advanced valuation and methods 15Technical analysis 15Portfolio, risk and behaviour 15Economy, sectors and the calendar 22
Portfolio, risk and behaviour · 4 min read
Diversification explained: what it does and does not protect against
See how spreading money across different holdings reduces company-specific risk, why it cannot remove market risk, and w...
Portfolio, risk and behaviour · 4 min read
Asset allocation: the decision that drives most of your result
Learn how splitting money among stocks, bonds and cash sets a portfolio's overall risk, how to think about choosing a mi...
Portfolio, risk and behaviour · 4 min read
Rebalancing a portfolio
Learn why portfolio weights drift, the main ways to rebalance, what it costs in trading and taxes, and what it can and c...
Portfolio, risk and behaviour · 4 min read
Dollar-cost averaging vs lump sum investing
Compare investing a fixed amount on a schedule with investing everything at once, see how average cost works, and learn...
Portfolio, risk and behaviour · 4 min read
Risk tolerance and time horizon
Learn the difference between willingness, ability and need to take risk, how time horizon changes the picture, and how t...
Portfolio, risk and behaviour · 4 min read
Drawdown, standard deviation and other risk measures
Understand maximum drawdown, standard deviation, downside deviation, beta and value at risk, how each is calculated, and...
Portfolio, risk and behaviour · 4 min read
The Sharpe ratio and risk-adjusted returns
Learn how the Sharpe ratio measures return earned per unit of volatility, how to calculate and compare it, and why a hig...
Portfolio, risk and behaviour · 4 min read
Correlation between stocks and why it moves
Learn what a correlation coefficient measures, how it relates to beta and diversification, and why correlations between...
Portfolio, risk and behaviour · 4 min read
Position sizing: how much to put in one stock
Learn how position size decides what one mistake costs, three common ways to size a holding, and why correlation and unc...
Portfolio, risk and behaviour · 5 min read
Stop-loss orders: pros, cons and gaps
Learn how stop, stop-limit and trailing stop orders work, why overnight gaps and whipsaws can defeat them, and what a st...
Portfolio, risk and behaviour · 5 min read
Behavioral biases: loss aversion, anchoring, confirmation bias
Learn how loss aversion, anchoring and confirmation bias distort investing decisions, with simple examples and practical...
Portfolio, risk and behaviour · 5 min read
FOMO, herd behavior and bubbles
Understand why fear of missing out and herd behavior push investors toward buying after big runs, how bubbles form and b...
Portfolio, risk and behaviour · 5 min read
A practical checklist before you buy a stock
Build a reusable pre-purchase checklist covering the business, earnings quality, balance sheet, valuation, risks and por...
Portfolio, risk and behaviour · 5 min read
How to research a stock in an afternoon
Follow a time-boxed, three-hour routine for researching a stock: the business, the filings, the numbers, valuation, risk...
Portfolio, risk and behaviour · 4 min read
Common investing mistakes and how to avoid them
Review the most common investing mistakes, from market timing and concentration to costs, leverage and overtrading, with...
Educational only, not financial advice.