When it comes to the market, there is no such thing as risk free investing. If you are not a little concerned before buying a stock, you have not done enough homework. You should make it a rule-that if you haven't found something to be concerned about, you should not buy.
To be a great investor, you must be able to recognize what the risks are. Investing is all about probability. What is the risk/reward quotient?
Here's an example: You own 10 stocks, in each case you bought $10k worth.
If 7 of the stocks go up 20% and 3 go down 20% over a one year period
Your return on investment is 8%
That is easy to understand right? So the bottom line is that if you want a greater return on your investment than 8%, you better be right 80% of the time.
Before I finish, I want to emphasize that it is important to find at least one thing that could go wrong with a stock before you invest in it. This one rule will save you thousands. Hey! It may even make you a million some day!
To be a great investor, you must be able to recognize what the risks are. Investing is all about probability. What is the risk/reward quotient?
Here's an example: You own 10 stocks, in each case you bought $10k worth.
If 7 of the stocks go up 20% and 3 go down 20% over a one year period
Your return on investment is 8%
That is easy to understand right? So the bottom line is that if you want a greater return on your investment than 8%, you better be right 80% of the time.
Before I finish, I want to emphasize that it is important to find at least one thing that could go wrong with a stock before you invest in it. This one rule will save you thousands. Hey! It may even make you a million some day!
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