In our previous illustration we discussed a few key terms to help one begin building one’s financial portfolio. We will continue to discuss some additional key terms that are essential. One will begin to realize that one can create a $77 million dollar investment portfolio with the correct strategy, training and risk management techniques.
Let’s consider AAPL, MSFT and GOOGL which are large corporations. They are not large solely because of their products and reputation but because they understand risk management. The economy, revenue, earnings reports, economic reports, product development, and stockholders are some of the criteria that will impact a corporations stock price. However, if a corporation does not implement risk management techniques, they will lose profit.
Risk refers to the degree to which an investor may lose his or her investment.
Return refers to how an investment performs and how much it gains or looses over a period of time.
Source of Risk refers to one’s investments which are subject to varying degrees of market risk.
Volatility refers to the amount of uncertainty or risk about the size of changes in a security’s value.