Page 81 - FlipBook BACK FROM SARAN - MAY 5 2020 - Don't Make Me Say I Told You So_6.14x9.21_v9_Neat

Don’t Make Me Say I Told You So 67

Market Risk – Market Risk is the day-to-day potential for an
investor to experience losses from fluctuations in securities

prices. The four standard market-risk factors are stock prices,
interest rates, foreign exchange rates, and commodity prices.

When the market plunges, almost all stocks, regardless of
their quality, growth potential, or dividend yield, are affected

negatively since everybody wants to sell their stocks but nobody
wants to buy.

Tax Risk – Taxes will reduce the amount of money that you’ve
earned from your stock portfolio. When calculating the “real

return” on your stock portfolio, you have to factor in both

inflation and taxes.

Economic Risk – When the economy falters or goes into a

recession, the value of your stocks can drop, and cause losses in
your portfolio. There are many things that can ignite economic
risk – things like natural disasters, political uncertainty, problems

in other countries, and many other factors.

Political and Governmental Risks – There are risks tied to
political actions and financial decisions by governments, both

in the United States and other countries. Wars, instability in
other regions, currency manipulation, and other government-

initiated actions can also have a negative effect on markets in
the U.S. and the rest of the world.

Chapter 3: You Must Have Growth In Your Portfolio