Types of Risk
There are two major types of stock market risks for stock investors: systematic and nonsystematic risks. It is important that you understand that your stocks may go down in price based on risks you have no control over. However, even though you don’t have control of these risks, you can prepare for them and provide some protection for your portfolio.
The other major type of risk to your portfolio is when you make unwise investment decisions, such as not doing your homework, paying too much for stock, investing on a tip, and so on.
Systematic risks are those issues that affect the stock market and/or the economy. These types of risk generally hurt all types of stocks, although some stocks may be more susceptible ...