There’s Always A Market Risk
We’ve seen a nice week of markets moving higher which brings some welcome relief from all of the worries we had just a week or two ago. Much of this relief was brought by easing concerns that global tensions with China are getting better. So now that the government shutdown and global tensions are getting better, are we in the clear as far as investment risks?
You need to be aware that there are always market risks with investing.
They come in many different flavors; but they are always there. We call these risks that are inherent in the market “systematic” risks. By holding a diversified portfolio across asset classes you can diversify some of this risk away. These risks can include, but are not limited to interest rate changes, inflation, recessions or wars.
Another category of risks are what we call unsystematic risks.
These risks you incur just by holding a specific company. Examples of these are weather conditions, labor, credit risk, or product trends. This risk is specific to a company or sector because of the nature of their business.
So as I mentioned earlier, this week brought great news. We seem to be making progress with some recently discussed risks. However, here is a risk that Jim Cramer points out in upcoming IPO’s (Initial Public Offerings) of companies you can soon invest in publicly. This is why as you invest your portfolio, stay mindful and informed of all that is happening in the market and how it affects you.
A further reminder is this simple chart that gets updated each year showing which asset class outperformed in various years. Keep your investment goals in mind. Invest knowing there are risks and you can diversify your risk through allocation.
Wondering how this affects your investments? Schedule a call with Michelle and Steve to discuss your portfolio today.