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For All Your Investing Needs |
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Welcome to the Equities Section of Options Realm |
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Today (2/28/2007) I am writing to you about risk and the stock market. I figured today would be a great time to talk about risk because today was the worst day for stocks since September 11th 2001. Today we saw the DOW drop over 400 points after weakness in the global economy stemmed fear in us traders that growth levels would not be able to be maintained. This down day was a reminder that investing and speculating in the stock market does include risks. When investing you should only invest with money that you are willing to lose. This is not meant to sound like one should not invest in stocks and should only hold bonds because for most people that is an inefficient way to invest. Historically stocks have outperformed Treasury Bonds during the same period. It is for this reason that I want to state how important it is the continually add money to your investment portfolio. While in the short-term is can be almost impossible to predict what the broader markets are going to do it has been historically proven that the markets rise over time. This is an important thing to understand because you should be scaling your money into the stock market. This way you will get the best results from the fact that over time the market will trend upward. This upward trend will allow you as an investor to take advantage of the drops in the market.
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