EP#20: Are you taking more risk than the return you're receiving? Even if you have an advisor, do your own research to find this out.

If you're invested into the S&P 500, you have more risk than return based on historical data.

Large market cap companies doesn't necessarily mean the stock is a good investment. Take a look at what's happened to IBM over the past 40 years. You would have annualized around 3% return (not including dividend).

Deere & Co. (DE) stock on the other hand, has annualized around 20% over the past 5 years. It made the list in January 2023 but did not in October 2023.

Costco (COST) stock has annualized ~19% return over the past 5 years with ~15% risk. It also made the list in January 2023 but not in October 2023.

This can be used as a stock screener but remember to do your own research. Changes over just 9 months is short term and this doesn't mean that the next 9 months will look the same.

Just because a company has performed well, doesn't mean it has low risk or that it will continue.

I've broken down the S&P 500 in January 2023 and more recently in October 2023 using the SPY ETF and noticed the following:

October 2023:

• Top 123 of holdings made up 75.2% of index

• Only 9 companies made "The List" = greater than 1.0 Sortino ratio and less than 20% risk, based on downside standard deviation of monthly data over the past 5 years.

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