What are the Stock Market Risks?
The stock market is a market where investors buy and sell various financial assets such as stocks, bonds, bonds, and commodities. Although investing in the stock market offers the opportunity to earn high returns, it also brings some risks. Knowing what these risks are and how they can be mitigated is an important part of being successful in the stock market.
Stock market risks can be broadly divided into two categories: systematic risks and unsystematic risks. Systematic risks are risks arising from unpredictable factors that affect the entire market or sector. For example, events such as political crises, economic crises, wars, natural disasters can be given as examples of systematic risks. Investors need to diversify their portfolio and follow a long-term investment strategy to avoid systematic risks.
Unsystematic risks, on the other hand, are risks arising from predictable factors that affect the performance of a particular company or sector. For example, events such as a decrease in the profitability of the company, a change in management, an increase in competition can be given as examples of unsystematic risks. To avoid unsystematic risks, investors need to analyze companies and follow fundamental data.
Stock market risks are important factors that affect the investor's decision-making process and return. Recognizing and managing these risks is essential to success in the stock market.