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Technology Stocks : SAP A.G. -- Ignore unavailable to you. Want to Upgrade?

To: growthvalue who wrote (2525)	9/10/1998 7:37:00 PM
From: mauser96	Read Replies (1) \| Respond to of 3424

OTOT Growthvalue, what methodology do you like for determining risk in advance? Is it subjective or objective? Personally, I've never found a reliable way to measure risk, certainly not a scientific one. I suppose the most common method is beta, but unfortunately past beta may change. In fact it usually seems to change right after I buy a stock. I'm a long term holder, and the longer the time, the more likely it is that the unexpected will happen. Real short term traders can probably measure risk better. What I usually do is make a risk decision with rather subjective methods,but I'm often wrong. A stock that fluctuates wildly is usually considered more risky, but is that really the case if you have some methodology that allows you to profit from the swings? What if your time span is long enough that the swings don't matter (as long as you have the basic trend correct)? A long shot may or may not be risky depending on expected payoff. A stock with only a 30% chance of rising might be a good bet if you thought the potential gain in case of a rise was 600%. A company developing a new breakthrough drug might fit this category. Of course we try to determine risk in advance, but the usual error rate is so high that the only accurate way to measure the real risk of your stock purchases is in retrospect. It could be said that most loser stock we own represent an error in our risk judgement. I would welcome anyone's comments on risk analysis. ...Meanwhile, SAP took another hit today. It was the biggest percentage loser in my portfolio. Quite volatile, as are many other ADR's. Does this make it necessarily more risky, since it seems to recover as fast as it fades.?