Lesson 1 of 8
Volatility
The price of higher returns
The VIX ("fear index"). Below 15 = calm. Above 30 = panic. Hit 82 during COVID.
Volatility is how wildly a stock's price swings. Beta measures it, 1.0 = moves with the market, 2.0 = twice as wild. Individual stocks can be brutal. Index funds smooth it out.
Beta across real stocks (vs the S&P 500)
Coca-Cola
Half the market's wiggle. Boring, defensive. Sleeps through most selloffs.
S&P 500
The yardstick. Everything else is measured against this.
NVIDIA
Up 239% in 2023, down 50% in 2022. Big swings in both directions.
Tesla
Twice as volatile as the market. Not a size-it-big position for most people.
MicroStrategy
Leveraged Bitcoin proxy. Can move 20%+ in a week in either direction.
Beta below 1.0 = less volatile than the market. Above 1.5 = you should expect brutal drawdowns regularly.
rule of thumb
Subtract your age from 110. That's roughly the % of your portfolio that should be in stocks. The rest in bonds.
Check yourself
VIX above 30 means what?