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Finance: What is Volatility? 77 Views


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Description:

What is volatility? In the world of investing, volatility basically means riskiness. It looks at the returns for stocks or indexes, and if they are all over the place, this signals high volatility. Because highly volatile investments see big changes in returns, they are obviously more risky.

Language:
English Language

Transcript

00:00

In finance allah shmoop what is volatility beta this thing

00:08

that's the symbol for volatility on the street we mean

00:11

the wall one not the mean one and it is

00:14

so commonly used that the in crowd members just say

00:17

beta when they're referring to volatility unless they're from tennessee

00:21

in which case they say you ve all y'all all

00:24

right so here's a siri's of stock prices stamped each

00:27

day that has lo ve all or low beta and

00:30

here's a siri's that has high beta dead man's pulse

00:33

versus rocky mountains Well what makes a stock volatile uncertainty

00:38

Think about it this way If everyone knew for sure

00:41

what a given stocks earnings would be for the next

00:44

ten years quarter by quarter and they also knew what

00:47

the overall markets average earnings would be in a few

00:50

other things like revenue growth and world conditions and we're

00:53

going to be war inflation there wouldn't be a lot

00:56

of guesswork The quote right unquote price today would be

00:59

thirty two dollars eighty three cents and the quote right

01:03

unquote rate of compounding would be eight percent in the

01:06

stock would slowly go up but this rate but in

01:09

non disney land riel life well nobody really knows much

01:12

of anything So stockcharts look like this and nerve endings

01:16

of wall street traders look like this Neither of them 00:01:19.771 --> [endTime] looked much like this chart So that's all you

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