Market Risk
- Thread starter drillinto
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'Risk' is probably the most important factor when investing in Shares.
The simplest way to have low risk is to keep most of your cash in fixed interest and other low interest investments. Why bother: Because markets will continue to boom and bust and if you are 100% in the market then it could well bust you.
Can you ever go low risk by having most of your money in shares. Yes, well probably - if you have a good pension and other assets that are substantial.
One of the worse risk scenarios is to have very few assets, just a job, and investing all spare cash in high risk commodity and mining stocks - though at the same time you could have a whole portfolio of small higgled pi-geld stocks that could crash to very little, yes, just as bad.
What about lots of research, surely that reduces risk. No! All it does is help build profits, especially in bullish markets. When the big bear arrives it will rip and tear at everything, the best and worse.
Never be a forced seller. Yes, this is a high risk situation as well as having insufficient cash to take up a rights issue. In fact, if you are having difficulty covering the bills and have loads of shares then think carefully in your risky situation.
A one stock person. I've been there. It really means having a large part, perhaps 30%+ in one stock. When it crashes it has a serious effect on your health. That can happen when one stock takes off in value, great you think, as it rises 30 fold or even more.
When a stock falls in value we can try and average the price down by buying more. Remember though, that the original loss remains the same and you are being drawn in. However, if you keep lots of cash and fixed interest investments - 50% or more: Then the risk is lower. After all, this made me a recent fortune and I can't stop following this risky way of investing.
I could go on for ever about risk. It is, I believe, the most important factor in investing - good fortune.
The simplest way to have low risk is to keep most of your cash in fixed interest and other low interest investments. Why bother: Because markets will continue to boom and bust and if you are 100% in the market then it could well bust you.
Can you ever go low risk by having most of your money in shares. Yes, well probably - if you have a good pension and other assets that are substantial.
One of the worse risk scenarios is to have very few assets, just a job, and investing all spare cash in high risk commodity and mining stocks - though at the same time you could have a whole portfolio of small higgled pi-geld stocks that could crash to very little, yes, just as bad.
What about lots of research, surely that reduces risk. No! All it does is help build profits, especially in bullish markets. When the big bear arrives it will rip and tear at everything, the best and worse.
Never be a forced seller. Yes, this is a high risk situation as well as having insufficient cash to take up a rights issue. In fact, if you are having difficulty covering the bills and have loads of shares then think carefully in your risky situation.
A one stock person. I've been there. It really means having a large part, perhaps 30%+ in one stock. When it crashes it has a serious effect on your health. That can happen when one stock takes off in value, great you think, as it rises 30 fold or even more.
When a stock falls in value we can try and average the price down by buying more. Remember though, that the original loss remains the same and you are being drawn in. However, if you keep lots of cash and fixed interest investments - 50% or more: Then the risk is lower. After all, this made me a recent fortune and I can't stop following this risky way of investing.
I could go on for ever about risk. It is, I believe, the most important factor in investing - good fortune.
