Well Managed Investing Risks Bring Rewards!
"Risk comes from not knowing what you're doing!" Warren Buffett (1930 - )
We often listen to people who hesitate to invest in the stock market because they fear risk. There are older people who fear that a stock crash could leave them destitute. There are young couples who pine for a new home but worry that an investment loss could kill their chances.
For any investor, risk is a fact of life!
Whenever an opportunity opens up for you to make an investment profit, you also face the fear of the possibility of suffering an investment loss. Even with "safe" kinds of investments, such as bank deposits, there is a risk that the rate you earn will not exceed the rate of inflation.
Often, these fears are rooted in a misunderstanding of what risk is. Those who understand market risks --and properly evaluate their ability to tolerate them-- can supercharge their investment portfolios by embracing a certain amount of uncertainty!
In the financial world, risk translates to uncertainty and it's measured by standard deviation from the norm.
Many individuals would say the riskier investment is the first, because their principal would be in greater jeopardy. But to professionals, the first investment is merely stupid --not risky--because it's a sure thing to lose!
Still, what worries many is that you never know when the stock market is going to dive. What if it falls right before you need to sell?
Most individuals measure risk as their chance of loss, but we measure risk by the variability of returns!
In other words, because stocks have higher average returns, you can suffer some losses and still end up vastly ahead over the long run.
There's only one situation in which adding stocks to your portfolio doesn't make sense--when you don't have time to let the market work for you.
In any given year, you have about a 1 in 4 chance of taking a loss in the stock market. If one year or less is as long as you plan to invest, stocks boil down to a gamble.
But if your time horizon is five years or more, there's a very good chance that putting at least a portion of your money in stocks will boost the performance of your investments!
One question you have to resolve is the kind of investment risk you're comfortable taking. The choice ranges from conservative to aggressive, with a broad middle ground between the extremes.
Conservative Investing: Means putting money where there's little risk to principal.
Moderate Investing: Means taking risks by putting money into growth stocks and bonds.
Aggressive or Speculative Investing: Means taking a possible risk of losing part of your investment in exchange for the possibility of making a larger profit.
The ideal risk equalizer is that you should work for balance among the various risk categories.
One of your concerns should also be that if you invest too conservatively, you won't have enough money down the road to afford your goals even if you've been diligent in following your plan.
Another concern is that by taking too many chances you risk losing too much of your capital.
Ioannis - Evangelos C. Haramis was born in Greece in 1951 and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the editor of http://www.greekshares.com
Copyright © 2005 I.E.C. Haramis
haramis@greekshares.com
http://www.greekshares.com
 Google News Updated : Sun, 07 Sep 2008 08:08:09 GMT Tim Tebow leads Florida past Miami - Los Angeles Times
Los Angeles Times - * at No. 5 Florida 26, Miami 3: Tim Tebow threw two touchdown passes for the Gators (2-0), who ended a six-game losing streak against the Hurricanes with their first win in the on-again, off-again series since 1985. Tebow's maturity key to Gators' win over Canes - College Football Marve's debut gives Miami (Fla.) reason for hope Publ.Date : Sun, 07 Sep 2008 06:58:47 GMT 'Wrestler' wins Golden Lion - Hollywood Reporter
Hollywood Reporter - By Eric J. Lyman ROME - Darren Aronofsky's "The Wrestler," which set the Venice Lido abuzz after its world premiere Friday, won the festival's top prize Saturday. Video: Mickey Rourke Pinned in 'The Wrestler' Will victory at the Venice Film Festival help 'The Wrestler' in ... Publ.Date : Sun, 07 Sep 2008 05:36:04 GMT Sarah Palin may have women flocking - to Barack Obama - New York Daily News
New York Daily News - BY KENNETH R. BAZINET and MICHAEL McAULIFF WASHINGTON - If John McCain wanted to poach the women's vote from Barack Obama, he shouldn't have tapped a running mate who dubbed herself a "pit bull with lipstick. Sarah Palin's appeal to working-class women may be limited A feminist's argument for McCain's VP Publ.Date : Sat, 06 Sep 2008 18:10:33 GMT Yes, the mosquitoes were nasty this summer - Yakima Herald-Republic Yakima Herald-Republic - by Ross Courtney PROSSER - Cody Jansen sloshes through a pasture, his rubber boots squishing in muddy puddles as he goes. He dips a ladle into a tiny pool and looks closely. Rockland resisted West Nile virus query Aerial survey being conducted to find mosquito breeding grounds Publ.Date : Sun, 07 Sep 2008 06:47:33 GMT Health Buzz: Immunosuppressive Drug Warning and Other Health News - U.S. News & World Report
U.S. News & World Report - The Food and Drug Administration has asked the manufacturers of Humira, Cimzia, Enbrel, and Remicade—which belong to a class of medications known as tumor necrosis factor alpha blockers (TNF-alpha blockers)—to strengthen the warning for risk of fungal ... FDA urges more caution over TNF blocker infections Arthritis Drugs Linked to Risks From Infection Publ.Date : Fri, 05 Sep 2008 15:23:08 GMT Gates outacts Seinfeld in Back To The Future - CNET News
CNET News - Which is why Crispin Porter Bogusky, the agency responsible for the otherworldly new Microsoft TV spot featuring the clowning Bill Gates and Jerry Seinfeld, is already happy. Microsoft's Renewed Vista Strategy Journals week in review: news from One Microsoft Way Publ.Date : Sun, 07 Sep 2008 00:01:52 GMT 'Home: A Novel' by Marilynne Robinson - Los Angeles Times
Los Angeles Times - Drawing on the characters of prize-winning novel 'Gilead,' Marilynne Robinson revisits an Iowa town. By Emily Barton UNLIKE novels that delight in plot twists and structural play, Marilynne Robinson's Pulitzer Prize-winning "Gilead" is seemingly ... Back at home, troubled siblings look for refuge Their Father's House Publ.Date : Sun, 07 Sep 2008 07:04:58 GMT Amazon Content |
PARLOT::Ebooks, Scripts,
Websites, and more... The stock market fell sharply Thu and Fri before and... Read More The American Jobs Creation Act of 2004 imposed strict new... Read More In part 1 of this article I started to look... Read More Those unfamiliar with the process of making and managing investments... Read More Gold Maple Leafs and Silver Maple Leafs are receiving packaging... Read More Today, I am going to start a multi-part series about... Read More Do you rule your superannuation or does it rule you?It's... Read More I said last week that money doesn't generally buy happiness,... Read More It is important to note that every smart investor wants... Read More Recently, my family and I took a trip to Maine... Read More Despite what some people may lead you to believe; day... Read More As I take my leisurely walk with my dog through... Read More A SEP is a special type of IRA. Under a... Read More The first point to mastering money management is that you... Read More Mutual Funds are considered to be one of the best... Read More Leaders are stocks that breakout immediately when the market confirms... Read More Typical day traders and swing traders look for stocks with... Read More The Roth is kind of weird until you get used... Read More The financial characteristics of the automobile dealership are attractive:". .... Read More AbstractA very slim minority of firms distribute dividends. This truism... Read More For those who have never given their financial future a... Read More In many respects, Singapore is the Switzerland of Asia.Begun in... Read More As an expatriate you are in a privileged savings and... Read More The Nature of Penny StocksFor anyone new to investing in... Read More You wouldn't build your home on anything less than a... Read More
Adsense
websites
Volatile Range
Protecting the Tax Advantage of Your Deferred Compensation
Trading For A Living - Part 2
Everybody Wants to Know How to Invest
Gold and Silver Maple Leafs Get New Packaging
How To Start Investing For Financial Independence, Part 1
Super Rules, OK?
Investing As A Sport?
Stocks: Reduce Risk Yet Maximize Profits
Lobster Trapping for Investment Ideas
Trading Is Not Rocket Science!
In a Time of Need
Is a SEP Plan Right For Your Business
Trading Expert Discovers Ways To Beat Stock Market Odds With Money Management
Is Your Mutual Fund the Right One for You?
Stock Market Leaders and Laggards
Day Traders and Swing Traders and Options? Maybe!
Almost Anyone Can Open A Roth IRA!
Investing in Car Dealerships: How to Do It Right
The Myth of the Earnings Yield
Seven Investment Terms Everyone Should Know
The Switzerland of Asia Shines
Investing Offshore for Retirement
Penny Stock Investing
Building The Foundation For Wealth
Affordable and Reliable Web Hosting Starting at $4.49/Month
Looking For a Safe Investment? Try a Certificate of Deposit
If you are looking for a safe investment and you... Read More
Trading Tips No 3: Online Trading and Investing: Buy, Hold, and Hope
So you have learned how to trade the markets by... Read More
Larry, Moe and Curley, Investment Brokers
Larry, Moe and Curley were sitting in their favorite restaurant... Read More
Ask The SEC
Who is the SEC and why should I ask them... Read More
Playing With Money - And Making More
Ready to start playing with your money? Not interested in... Read More
Everybody Wants to Know How to Invest
Those unfamiliar with the process of making and managing investments... Read More
Beta Factors: How They Can Be Used In The Current Situation
Ever since the turn of the century, world stock markets... Read More
Sell Discipline for Investors: Importance and Execution
Investors usually don't have an aversion to buying an asset.... Read More
Can Your Annuity Do This?
Okay, so I can tell you I have sat in... Read More
Making It Second Nature
Not long ago I was laying on my son's floor... Read More
How to Analyze the Veracity of Investment Newsletters
When trying to analyze whether a promotional ad for an... Read More
A Safe Port For Mutual Funds But Not You!
Soft dollars, a form of legal kickback, is a sly... Read More
The American Age of Inflation is Over
"The American Age of Inflation is finished." So says economist... Read More
Why Should I Use Penny Shares to Build Wealth?
A strategic question. Why indeed?1. A penny share would usually... Read More
Short Selling for Investors
Shorts. Let's see. If there are shorts there must be... Read More
What If You Absolutely Positively Could Not Lose - Would You Play the Stock Market?
Seniors on fixed incomes face a unique problem. Where do... Read More
Introduction To FOREX
The Foreign Exchange Market, better known as FOREX, is a... Read More
Angels, Are They Real?
They're real, but few survive. High risk investing is dangerous... Read More
Asset Location ? Increase Investing Returns & Reduce Your Taxes
Location ? Once the holy grail only for real estate... Read More
Investing in World Markets
There are many different ways to invest in world markets:... Read More
How To Create Wealth In The Stock Market
First and foremost, an opportunistic strategy for creating wealth in... Read More
How to Buy to Let
Find out everything you need to know about buy to... Read More
Top Ten Investment Mistakes
1. Lacking an investment plan a/k/a/ "Don't take a trip... Read More
Time is Money and We Are Running Out of Both!
One of the fundamental principles of finance is the concept... Read More
Preparing to Invest: How to get started
Investments can be a source of great potential earnings. The... Read More
Investing |