Chapter 4. Investment Risk: A Visit to the Dark Side

As an individual investor, you are likely bombarded with advertisements that imply (but by law cannot explicitly state) that if you sign on with the advertiser, you will reap generous investment returns. After all, without high returns, how else would you be able to fulfill all the fantasies in the commercials—paying for your children’s college, retiring to a house on the beach at age 55, and so on?

Unfortunately, picking an investment involves more than the quest for high returns. You need to consider the risks, too. However, the concept of investment risk is never mentioned in advertising, except perhaps by a speed-talker in the final seconds of a commercial, or in fine print at the bottom ...

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