Become the Ray Dalio of Your Stock Portfolio in Minutes

By Ted Bauman, Banyan Hill Publishing, Tuesday, June 8

Risk parity will make all the difference in the world to your investing success.

Ray Dalio, billionaire hedge fund manager, uses it at his quant-based hedge fund — Bridgewater Associates. It’s the concept of investing based on allocation of risk using volatility instead of other commonly known techniques (such as using market cap).

What essentially happens is you wind up buying the same stocks, but you put LESS money into higher volatility (riskier) stocks and MORE money into stocks that have lower volatility (less risky).

And you sleep much better at night because you did so!

Your goal is to have your portfolio as a whole rise over time, with the least amount of fluctuation to get you there.

But to make this easy, you need…

A “Position Size Calculator”

We have one in our TradeSmith system. It has three different scenarios for how to buy a stock:

  1. You could say: “I want to risk $1,000. How much of this stock should I buy?”
  2. Or if you have a $100,000 portfolio, you could say: “I’d like to risk 2% of my portfolio, how much should I buy?”
  3. Finally, you could say: “I want to buy this stock with equal risk to the stocks in my portfolio. How much should I buy?”

This tool is VERY easy to use and it’s set to walk you through the perfect position sizing for you in less than a minute.

So, let’s say I want to buy Tesla (Nasdaq: TSLA) and we’re using the examples above.

Tesla is what we’d call a highly volatile stock. In fact, in our system, we label it with our proprietary measurement of volatility, called the VQ, at 50%.

That’s a really risky stock.

But I’d buy it because I want risky/volatile stocks to help my portfolio move higher. I just don’t want to buy “too much” of those types of stocks.

So, in our scenarios above, here’s how much of Tesla I’d buy:

  1. Willing to risk $1,000 … buy $2,000 worth of Tesla.
  2. I have a $100,000 portfolio of which I’m willing to risk 2% … buy $4,000 worth of Tesla.
  3. I have an existing portfolio in which I want equal risk? That would be 12 shares for me.

The entire goal here is to buy the right amount of a stock to minimize your risk while maximizing your gains.

Size matters a LOT. Don’t get it wrong.

How to Tap Into the Most Powerful Income Stream in America... [sponsor]

Each month, America’s most powerful investment is set to pay out around $4.7 billion on average. According to Kiplinger, it can “provide a steady stream of retirement income that will last a lifetime.” If you’d like to see what all the fuss is about … and snag your share of the $4.7 billion payout as soon as next month click here for the full story.


RediNews | | Copyright © 2013 - 2021, All Rights Reserved

Nothing in is intended to be investment advice, nor does it represent the opinion of, counsel from, or recommendations by BNK Invest Inc. or any of its affiliates, subsidiaries or partners. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All viewers agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. By visiting, using or viewing this site, you agree to the following Full Disclaimer & Terms of Use and Privacy Policy. Video widget and market videos powered by Market News Video.