Penny Stock Brokers 4u

All investments have a degree of risk but unless you want to bury your money in the back yard, which is also risky, at some point you will have to decide how much risk you can bear if you want to grow your portfolio. The usual rule of thumb tells us that the more the risk the higher the reward, but that is not always true because some investments are so risky as to make the probability for not only little or no growth but also of losing some or all of your original investment.

Stock market risk is especially difficult to ascertain due to the way the stock market reacts. Financial news can send the markets into a tailspin and sometimes worldwide panic can ensue. While you would have to be nearly 100 years old to have experienced the devastation of the October 24, 1929 Black Thursday stock market crash first hand, few do not know from family accounts how serious it was and how horrendous the Great Depression that followed it was for the entire country.  A market crash of this level does not affect just one country, as we saw with the October 18, 198 Black Monday crash that began in Hong Kong.  While hopefully such crashes have been minimized by the NYSE circuit breakers which halt or close trading when the Dow declines a significant amount, it is still possible for wide volatility within the market.

There are various factors that affect stock market risk that an investor must consider:

• Personal Emotion – Emotions play an important role when managing a stock portfolio, namely the ability to apply emotionless facts, statistics and knowledge rather than the emotional approach of “going by gut instincts” or allowing greed or anxiety to rule decision making.
• Market Emotion – Getting caught up in the frenzy of a news article can lead to disastrous results, but taking too long to respond to news can also be a mistake. Being able to gauge public sentiment and forecast trends takes experience.
• Experience – Stock market investing is not for the beginner and the new investor should limit the amount invested until they become more knowledgeable. It is also important to note that sometimes a person’s life experiences can sway them away from or towards specific industries when that move may not be the wisest decision.
• Attitude – The stock market investor should always harbor the attitude that this is serious business and not just a hobby. One needs dedication and diligence to reduce the risks involved with investing in the stock market.