How Can I Understand Risk?

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Risk
Human beings like to bet on anything that moves.
It is possible to bet on the weather, when famous people may die, sporting events, horses, dogs, etc.
It is also possible to “bet” on companies.
Many people feel that the stock market is just a legalized form of gambling.
That can be true, especially when acting on “tips” or some “get-rich-quick” method.
Risk Tests
There are many “Risk Tests” online that are free.
Tests vary from person to person.
Also, results will be different for each person.
Risk Tolerance can change over time.
Market conditions can change.
In summary, Risk is fluid and can vary based on the person, current climate, and time horizon.
Determining Risk
Each person has a risk level.
Different people have different levels of risk they are willing to assume.
Some people are willing to take on more risk, while others are willing to take on less risk.
The general rule of thumb is if a person finds themselves thinking about something often, or losing sleep, they have assumed too much risk.
Prudent consideration should be made for how to fund a program.
Understanding Risk
Everything in life has risk.
For example, the same can be said about driving a car.
If a person doesn’t know how to operate a vehicle correctly, they could be a high risk to themselves and others.
A car is neither good nor bad in and of itself.
A car can be used for good by getting to a job, taking somebody to the hospital, going on a pleasure drive, or any number of things.
Automobiles have become a fact of life, especially in the United States.
However, in the wrong hands, a car can also be a weapon or very dangerous.
There are hundreds of thousands, if not millions, of people killed each year in auto accidents worldwide.
It is better to look at the stock market in the same way one would look at an automobile.
It is Amoral.
It is how a person uses it that determines if it is beneficial or not beneficial.
Risk Versus Reward
Risk Pyramid
Developing An SPX Strategy
The SPX Investing Program teaches different strategies.
Some of these strategies are considered:
Conservative
Moderate
Risky or Aggressive
What is considered conservative to one Investor may be risky to another Investor.
In a perfect world, it would be nice to take $100, turn it into $10 million in 2 weeks without any risk at all.
That, of course, is not going to happen.
A person would have a better chance by playing the lottery or going to Las Vegas.
The SPX Investing Program will help Members to determine which strategies to implement and when it is best to do so.
Curtailing Risk
It is impossible to remove all Risk.
However, some points that will help reduce Risk include:
Knowledge and teachability
Developing a working plan & strategy
Practice
Diversification
Respect for the markets
Realistic goals
Flexibility
Prayer
If any of you lacks wisdom, you should ask God, who gives generously to all without finding fault, and it will be given to you.
James 1:5