Chapter 3. Investment Risk

After you decide to study the stock market because it has been the most profitable market over the long term, what aspects of investments do you need to consider? Ultimately, you have to decide how to convert these thoughts into a realistic and effective portfolio.

You not only must decide on what method to use in buying stocks, but also what to do with them when you own them. Investing is not as simple as buying and selling. Each decision must include not only the prospects for gain, but also the possibility of loss. Before we get into how to buy and sell, let’s first address the problem of risk.

Individual Stock Risk

The concept of risk as it is used by most professionals and academics is completely wrong. Risk by their ...

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