What is the stock's beta?

If a stock has a lower beta will it out-perform the other stocks or under-perform?

• Beta is the responsiveness of each stock's return to changes in the market return. If a stock has a lower beta then it won't follow the market as much so what does it follow?

• Answer:

  A lower beta stock is less volatile than the S&P 500. In up markets it tends to lag the rise in other stocks. In down markets it tends to lag the decline in other stocks. Blue chip dividend paying stocks tend to have low betas. PG--0.48, KMB--0.41, MCD--0.47, ABT--0.26, KO--0.58. Speculative stocks tend to have very high betas. The more speculative the higher the beta. When the market is going up people tend to jump into the most speculative stocks. When the market is going down people tend to dump them like hot potatoes. Among those with the highest betas are Pier One Imports--5.3, Avis--5.8, Gulf Resources--6.1. About 300 stocks under $10 a share have a beta greater than 2. That is about half the total with a beta greater than 2. Betas do tend to change and sometimes dramatically. At one time bank stocks had very low betas. Now they tend to be somewhat high. BAC--2.3, C--2.7,