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Stock Investment Risk Articles

Securities and Exchange Commission Complaint Procedures

Whenever a problem occurs with the investment account, investors should discuss the matter directly with their financial professional and if they fail to get a satisfactory resolution, they can lodge a complaint with the SEC.

Telecommunications Technology Securities’ Fraud Alert

Investors should be careful about investing in telecommunications technology ventures since the Securities and Exchange Commission has been receiving complaints recently.

Convertible Securities’ Risks to Common Stock Holders

To estimate the risks before investing in the common stock of a company, first check whether the company is issuing convertible securities and find out whether such they are converted using a fixed-price or a market-price formula.

Investors Beware of Government Impersonators

Investors need to beware of a type of investment scam that involves impersonators of government officials.

Options on Securing Your Securities

What are the main ways by which an investor can hold his securities? What are the pros and cons of each option depending on the investment instrument?

Investor Alert: How to Avoid Investment Fraud

Whether you are a beginning or a veteran investor, you should take all the necessary steps to protect yourself from investment fraud. Read our tips on avoiding investment scams.

What Happens When a Public Company Goes Private

When a public company goes private, it is subject to less rigorous reporting requirements and its shareholders may find it harder to keep track of their investments or may be unable to sell their shares in the public marketplaces.

What Are Promissory Notes and How to Avoid Promissory Note Fraud

Promissory notes are legitimate investment instruments but since there has been a recent rash of promissory note fraud targeting individual investors, be careful when making a promissory note investment and learn more about these instruments.

Implications of Bankruptcy to Investors

What happens to investors when a public company files for corporate bankruptcy (i.e. goes bankrupt) is a pressing concern among investors, especially in light of an economic recession and stock market crash.

Types of Corporate Bankruptcy

Investors should learn to distinguish between the two types of corporate bankruptcy: Chapter 11 Bankruptcy and Chapter 7 Bankruptcy.

Financial Analysts: Potential Sources of Bias

Financial analysts (a.k.a. research analysts, securities analysts, equities analysts) are subject to social pressures, same as everyone else and may not always be truthful or fair.

Filing for Chapter 11 Bankruptcy

A bankrupt company may turn to Chapter 11 of the Bankruptcy Code in order to start “reorganizing” its business and make an effort to become profitable again. This article will help you learn more about Chapter 11 bankruptcy.

Chapter 7 Bankruptcy

When the bankrupt company uses Chapter 7, it stops operating and goes completely out of business. This article will try to get you familiar with corporate bankruptcy under chapter 7.

Understanding Margin Calls

If your account falls below your brokerage firm’s maintenance requirement (maintenance margin) the firm will generally issue a margin call.

Day Trading Profit and Risks

Because of the possible both high profits and losses, day traders are often referred to as gamblers (and sometimes bandits) by other investors.

Short Selling Risk

As simple as the concept of selling stocks short may sound, short selling has its risks and you should be aware of them.

Risks of After-Hours Trading

After-hours trading does provide investing opportunities, but there are also many risks and complications involved. Here we list some of them.

Government Bailout Plans

There is a lot of criticism against the recent unprecedented intervention in the financial markets by the government. Yet, many argue that government bailout plans are needed in order to avoid consequences worse than the Great Depression.

The Credit Crisis (Credit Crunch)

When did the subprime mortgage crisis turned into a credit crisis and how did this happen? What are the consequences of the credit crunch?

The Subprime Mortgage Crisis Explained

The so called subprime mortgage crisis - the crisis that brought the global financial system down - when, how and why did it happen?

What Caused the Current Financial Crisis?

This article will try to explain the original causes of the current US financial crisis (probably the biggest after the Great Depression) and its effect on the world economy.

Stock Market Risk Premium

Risk premiums are a suitable yardstick for judging the worthiness of investing your money in particular stocks. In order to achieve better results on the stock market you should harmonize the level of risk with the rewards you expect to get from the particular stock.

Stock Valuation Failures

Most investors start to celebrate when the conditions of a bull market are observed. However, the history is full of examples when bull markets have not been so beneficial and the risk of stock valuation failure exists.

Effects of Inflation on Your Investment Portfolio

Inflation represents one of the major threats to stock investors. When the inflation rates rise, investors get nervous in expectation of the potentially negative consequences.

Time, Risk and Investment Goals

When you begin stock investing you should clearly determine your goals for doing so. However, you should expect that your goals and the risk you are willing to take change over time because your way of life changes as well.

Stock Market Crash Prevention Measures

The history of the stock market is marked with many crashes. In order to avoid such crashes in the future, several limits were implemented.

Inverted Yield Curve Implications

An inverted yield curve results when short-term interest rates are higher than long-term interest rates.

The Importance of Portfolio Rebalance

In the course of investing the portfolio may go out of balance. If a significant change in your asset proportions has occurred take immediate actions in order not to expose yourself to higher level of risk than you can face.

Market Timing Hidden Traps

Timing the market can be dangerous for investors that are making their first steps in the stock market. Many opponents of market timing claim that accurate prediction of market movements is very risky and in itself represents a form of gambling.

Longevity Risk and Retirement Plans

There are many types of risk with which investors should deal with, such as inflation, economic, market risk and etc. One of them can threaten your retirement plan and it is called longevity risk.

High Risk, High Return

Many investors purchase a particular stock with the intention of making a big profit over a short period of time. However, this action is not investing, but a pure gambling and you are never guaranteed that you will get the high returns you hope for over such a short period of time.

Beta Ratio Basics

In order to measure the volatility of the price of a stock relative to the rest of the market and to determine the level of risk a particular stock carries you should apply the Beta ratio.

Assessment of Risk Tolerance

Before embarking on investing activities you should establish a risk zone within which you feel comfortable. Once you have done this you should observe your risk tolerance in order not to undertake trades that are above your risk tolerance level.

Investment Risk Tolerance Level

When deciding on the investment in a particular stock you should weigh whether the risk is worth the reward you will gain. In order to make investment choices that fit your financial goals you should first establish your risk tolerance and conform the investment decisions you make to it.

Investment Risk Types and Advices

Stock investing and risk go hand in hand. You have control over certain types of risk, whereas others are beyond your control. Thus, when you establish your investment portfolio it is extremely important to make a clear view of your risk tolerance level.

Minimize Your Stock Losses

Many investors commit the common mistake of holding a stock that is losing its value. However, they don’t realize that if they don't minimize the losses now, they risk having greater losses later.

Types of Stock Market Losses

Stock investing is not insured against losses. You may have already sustained some losses, but haven’t been able to recognize them since they come in a variety of forms.

Avoiding Stock Market Fraud and Scams

The stock market is not deprived of its crooks, waiting to defraud you when you least expect. The wide use and availability of the Internet has facilitated their work.