Stock Valuation Essay Example | Topics and Well Written Essays - 250 words - 1

Stock Valuation - Essay Example ter every three months and good dividend paying stocks increase their payout every year unlike those who own funds who most of the time are not sure about what the dividends will be and instead have a default option to buy more shares. It is also easier to understand market volatility since the investor knows the company well, and this helps an investor to make a decision whether to buy, sell or hold their position. Individual stocks also have lower costs than funds help one to diversify their holdings (Hayek, 2013). I would not be okay with the political risks that are prevalent in the increase among the BRISC countries since these countries include the emerging markets that need ample political stability to grow and mature. The political risk brings a lot of volatility in the stock market, as well as discourages foreign and domestic investment as investors prefer more stable markets that are easily predictable in order not to take so much risk. Through negative correlation, the idea of hedging and diversification are elaborated. Since negative correlation tends to make two investments move in opposite directions, an investor is therefore advised to invest in both the investments in order to spread risks. It makes sense that, when an investor invests in those two investments, one investment loses value, the other one will gain value hence the investor must not lose everything at any particular point, but at least gain on some (Eric,