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Portfolios 306: Getting More Aggressive

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1.
Why may tilting your portfolio toward growth stocks theoretically alter its performance?
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Because companies that are growing at a decent rate should outperform companies growing at a slower rate. Over time, a stock's price follows its earnings. As a result, companies that are growing at a decent rate should outperform those companies growing at a slower rate.
2.
According to many financial professionals, what contributes the most to your portfolio's return and volatility?
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Your blend of investments. In other words, your asset allocation is what matters more than anything else.
3.
What type of bond would be the least volatile part of an aggressive portfolio?
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Short-term bond. Short-term bonds are the least volatile of these options.
4.
To alter your foreign investments, consider _______.
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Smaller companies. As in the United States, foreign mid- and small-company stocks theoretically have a growth edge over their larger counterparts. Emerging-markets stocks are also an option for aggressive investors.
5.
Emerging-market stocks live up to their promise.
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False. Although these stocks can be considered aggressive, often the emerging nations behind them have a lot of challenges to overcome. It remains to be seen just how promising they are.