Stock markets, here's how to earn more (and risk less)

Investors, don't improvise.
It might seem obvious, but today, looking at the multitude of information available to everyone, the topic of investments and their very understanding seems to be trivial.
We talk about the need to introduce the now increasingly widespread and so-called financial education, but often the fundamental aspect of having to spread the true meaning behind this unknown subject is overlooked: that of financial awareness.
This, which for many could be a subtle difference, however, represents the most important obstacle to face and overcome.
In fact, an "educated" subject may sometimes not correspond to a subject "aware" of what he should have learned.
It is enough to remember those testing situations in the school environment which, although yielding to an unexpected degree of sufficiency, found, in the following days, a complete void.
In this case, the formal role of a student certified the passing of the test taken, but the reality of the facts, instead, showed the state of a child without consciousness.
Once this potential dystonia between being educated and being aware has been consolidated, from a financial point of view, the closest consequence that derives from it is synonymous with an almost certain failure or rather: the loss of money.
Therefore, in order to overcome the misunderstanding between knowing and thinking of knowing, when making a possible investment choice, it is considered more useful to pursue an approach that aims to obtain objective information which, in this case of so-called finance , are represented by numbers; as a corollary to these, then, and only then (if necessary) will come all the other aspects of a subjective nature that can be identified through the usual reports, outlooks, judgments and so on.
We reiterate: at the base, first, there are the numbers.
And today we will talk about numbers, very interesting numbers.
The continued bullish trend of stock markets no longer seems to be newsworthy.
Wherever the gaze can search for information, estimates are found with a view to new records and, rarely, some sporadic recommendations for prudence which, apparently, are mostly dictated by a rare (subjective) common sense.
read also Bitcoin: here is the only certainty about its future revealed.
It is easy at this moment to be able to draw conclusions (ex post) following the significant increases and, at the same time, it is difficult to find something better performing than current events.
Except for individual titles.
In today's in-depth analysis, we instead want to bring attention to some key pillars that support a solid asset allocation.
Aware (financially) of the usual three-way division of the individual asset classes (equity, bonds and commodities), space has also been made for new entry alternatives.
It is obvious how the "historic trident" represents – still – the hard core of a portfolio (so-called core component), leaving the remaining investment solutions with a residual margin (so-called satellite component).
In addition to all this, however, very often, the most sought-after source that generates alpha or more simply sought-after added value is underestimated (thus neglecting the investment).
In order to rediscover (or discover) this hidden treasure, it is useless to underline it, but several hours of research, in-depth analysis and above all verification of the probably infinite numbers are necessary.
Today, we wanted to bring a first element to the attention of all of you, starting from a question: by looking at the international stock markets, is it possible to identify an underlying that has represented a fair compromise between return and sustained risk? Theoretically, the best answer would be the one that achieves a high return while assuming a low risk.
But, as mentioned, this is theory.
Question: what if, instead, this win-win combination was present and under everyone's eyes? Well.
The answer we provide is this: it is there, it exists, it is real and, as you can imagine, it is not known to many.
We can say many.
We are talking about an international, sectoral stock index which, even from a rational point of view, finds its reason for being in everyday life.
Therefore, nothing to do with futuristic opportunities, AI, cyber security, etc., but rather, only and simply our daily consumption.
Specifically, it concerns the well-known (to the few) MSCI World Consumer Staples Index which, taking up a description extracted from a common document containing the key information underlying this investment instrument, reports: «conceived to reflect the performance of listed shares of some companies in various developed countries.
Shares are issued by companies operating in the major consumer goods sector.
The core consumer goods sector includes, for example, food, food retail, and household and personal care products.
The weighting of a company in the index depends on its relative capitalisation, determined as a function of the overall value of the free float (readily available shares) of a company compared to that of other companies." Looking at the details of the information sheet of the MSCI provider, the aforementioned developed countries are 23, namely «Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway , Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US" while the type of company is the usual large and mid cap.
Having revealed "the what", now it is necessary to "how much" of this unknown "financial artifice".
Comparing the historical series of the MSCI World USD index with those of the sector competitor, the parallelism is objectively to the advantage of the latter.
Starting from January 2000: the global international equity underlying goes from 1,420 to the current 3,400 points.
Conversely, the rediscovered World Consumer Staples Index sees its values rise from area 84 to today's 282 points.
The comment is yours.
Furthermore, if this time period were too long, even on a more limited and recent horizon (2010-2022) the sector performance (from 116 to 278 points) shows the upper hand compared to that of the shareholding structure (from 1,166 to 2,607 points).
Only by including last year can we find a change in first place (MSCI World leader) of this two-way race.
Having cleared the efficiency in quantitative terms (ref.
performance), now, an – objective – synthesis is necessary in the qualitative field (ref.
risk).
Also from the MSCI information sheet, the following percentage values of annualized standard deviation emerge contextualized to specific time frames (three, five and ten years): 13.58%, 13.39% and 11.79% for the World Consumer Stample versus i 17.05%, 18.05% and 14.90% of the World macro index.
Again, the comment is up to you.
Today, with the numbers in hand, we have tried to make up for a possible lack of financial awareness despite there being many and varied teachers dedicated to the one and only education.
Observing these last few years, the growth of the stock markets has, in fact, made up for and strengthened the belief of knowing through unexpected gains, but this cannot continue indefinitely.
Let us begin, immediately, now, to realize this present reality.
If this were not the case, the alternative is immediately revealed: copious losses of money.