Claude Shannon at MIT demonstrated that a portfolio balance between a random walk and cash would optimize your gains at a ratio of 50 / 50. For example, if you had $1,000 in a 50 / 50 ratio between a stock ( random walk ) and cash, you would start with $500 / $500. If the stock should drop in half, you would have $250 / $500 so you would rebalance by buying $125 in stock to have $375 / $375. If the stock should return to it’s original price, you would have $750 / $375 for a portfolio value of $1,125. Had the stock doubled and then halved, you would also have wound up with $1,125.

Of course, the reason for the division between stock and cash is that they are by definition negatively correlated, bonds are also negatively correlated unless defaulted upon so bonds is the usual counterweight, commodities like gold are statistically uncorrelated so the brave may use gold. As bonds have a modest return, it’s reasonable to expect the optimal balance to be less than 50% stocks. Indeed Ben Graham says 45% stocks and 55% bonds, and to go no lower than 25% stocks and no higher than 80% stocks ( as you would have nothing to rebalance with if you’re too high ). Markowitz’s efficient frontier used a tangential line from the risk free rate to the Markowitz "bullet" to define the optimal mix and this usually winds up around the 40% mark.

So the question remains why would anyone invest in anything riskier than a moderate portfolio? There’s plenty of advice such as to subtract your age from 100 to determine your risk allocation so why would that be the case?

My thoughts to that is because if you are committed to investing a certain amount of your paycheck each month, you indeed own a bond. You can even determine the market value of that bond by discounting future deposits by a reasonable rate of return. Since you can’t sell your job, the market rate of return should be that of a similar risk or higher than your portfolio returns. Perhaps your company’s bond yields could be an indicator or your historic rate of return. For example, the present value of $466 per month ( enough to max out an IRA or TFSA ) for 40 years at a market rate of 4% per annum would be $112,695.98 therefore you already have that much invested in bonds and can invest in stocks till you reach the appropriate balance. Of course, it would probably still be wise to observe Ben Graham’s 80% rule.

The reason why you don’t invest in a random stock is the value on the table, a company’s profits is either reinvested to grow the business or distributed to the shareholders. So long as this occurs, there’s value in the company and the stock won’t go to zero regardless of whether or not it’s a random walk.

1. Borrowing costs will go up, so corporate profits will go down.
2. The value of the currency will increase and reduce foreign demand for the stock.
3. Rising interest rates reduce profits for banks and other companies that use short-term borrowing to make long-term loans.
4. Interest on government debt will rise, leading to increased taxes and/or lower government spending, both of which will reduce corporate profits.

Recently the layout of the stock and mutual fund quote pages has changed to
no longer provide Last Close and Last Close Date in html table format.

Was the page layout change done to facilitate use by another tool, service or
web-Service? Does Yahoo sell or plan to sell a product such as a custom dll
or web-Service to parse the new layout?

Slap it and try again.

You can use strike-iron services if you want a stock quote on your site but it costs you. you can have a yahoo widget but that have ads.

You can check this site to see what are all available. http://www.programmableweb.com/apis/directory/1?sort=category

see under financial