You could also analyze any single stock with this versatile tool. Monte Carlo simulations let you consider the risks and opportunities for your chosen company in light of factors such as different interest and inflation rates, wider or tighter profit margins, and intense or lukewarm end-market demand. You’ll gain a deeper understanding of the business model’s sensitivity to these issues, and you should also gain an understanding of how likely the risks are to materialize. This knowledge will provide a sound basis for any decision you make, whether it’s to buy, hold, or sell.
These are just a couple of examples, but the possibilities are endless. Whether you're planning for retirement, diversifying your portfolio, or just considering whether you should invest in a particular stock, Monte Carlo simulations can help you reach a more informed decision.