Techniques

What this video covers

• Why diversification eliminates unsystematic (diversifiable) risk but retains all systematic (market) risk, and how correlation of negative 1.0 produces maximum benefit
• How sector rotation maps to the business cycle clock: cyclicals in early recovery, information technology at mid cycle, energy and materials at late cycle, and defensives in recession
• Why dollar-cost averaging requires a fixed dollar amount, not fixed shares, and why average cost per share is always lower than average price per share in fluctuating markets
• When a protective put is the correct hedge for downside protection versus when a covered call generates income but caps upside
• The 50% federal initial margin requirement and 25% maintenance margin threshold that trigger forced liquidation
• Why leveraged and inverse exchange-traded funds (ETFs) suffer daily reset decay and are unsuitable for retail buy-and-hold investors
• How high-frequency trading differs from active day trading by requiring institutional infrastructure and co-located servers