Risk Management 101: Protecting Your Portfolio from the Unexpected

Рет қаралды 2,267

Күн бұрын

New to investing? Starting out, most of us focus on potential gains. But what about the risks? This video dives deep into the two main types of investment risk and shows you how to develop a plan to address them.
Learn how to:
- Identify and manage systematic risk (affects the entire market) -Systematic risk, also known as market risk or undiversifiable risk, is the inherent risk affecting the entire market.
Examples of systematic risks include changes in interest rates, economic downturns, political instability, natural disasters, and systemic financial crises.
Recent Systematic Risk examples include: COVID, Russia/Ukraine Conflict, subsequent inflation shocks. Addressing these with Portfolio Exposure levels is crucial. This is why margin can be dangerous. Investors cannot eliminate systematic risk through diversification; this limitation underscores the boundaries of diversification.
- Protect yourself from idiosyncratic risk (specific to a company or industry) Idiosyncratic risk, also known as unsystematic risk or diversifiable risk, is specific to a particular company, industry, or sector. It can be mitigated or eliminated through diversification because it pertains only to a specific asset or group of assets.
Common Idiosyncratic Risks include stock offerings, management errors or fraud, supply chain disruptions, competition, analyst upgrades/downgrades, reputation, litigation, and earnings season. Planning for all these risks in establishing exposure and concentration is necessary.
- Diversify your portfolio strategically (beyond just the number of stocks)
Diversification can be achieved through number stocks in a portfolio, prices paid, or time taken to establish a position.
- Develop a position sizing strategy to limit downside exposure
- Craft a plan for earnings season volatility (and avoid nasty surprises!)
- Feeling overwhelmed by potential risks can lead to costly decisions. By understanding these risks and creating a plan, you'll be in a better position to stay calm, make smart choices, and achieve your investment goals!
Ready to take your investing to the next level?
Limited time offer of $899 USD for a lifetime access: Explore the Active Growth Investor Course (including a new module on Earnings Hedging). www.carusoinsights.com/course/
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Пікірлер: 14

@LupeBaptista 2 ай бұрын

I’ve been eye balling a couple of Tech stocks and NVDA for a while now to make up my stock ETF. I own no A.I stocks but want to add that to my portfolio, or is it risky? I currently have about $250k from an insurance payout and I'd love to manage it properly.

@arlenehill4ril 2 ай бұрын

it is advisable to work with a seasoned advisor to help make informed decisions, instead of relying solely on investing on your own

@fromthebirchwood 2 ай бұрын

very much appreciated, curiously inputted ''Karen Lynne Chess'' on the internet, spotted her consulting page ranked top and was able to schedule a call session. Ive seen commentaries about advisors but not one looks this phenomenal

@mehrdadmithra9591 29 күн бұрын

Better to watch this video every day before the market is opened , or at least once a week . Very useful, many thanks.

@xianlin7831 3 ай бұрын

Thank you for sharing ,very basic awareness but very important aspect of investing

@paulwu1301 3 ай бұрын

Your videos are good Matt.

@TheCynzu2 3 ай бұрын

Thanks Matt, your personal stories always bring so much more to the content!

@jamese7879 3 ай бұрын

Very interesting video!!

@michaelhoots7388 3 ай бұрын

Would it be possible to get just the module on earnings hedging?

@edge0785 3 ай бұрын

Yes! Another video!

@carusoinsights 3 ай бұрын

Unfortunately with tensions rising, it's timely!

@user-lk3oo5uq4z 3 ай бұрын

Another type of risk: when good periods turn into challenging ones. Would appreciate your comments. Many excellent traders advise increasing exposure as open trades become successful and account balance goes up. However this leads to a problem under distribution regimes such as the one that started in March ’24. Assuming one honors one’s stops, you are going to lose a lot of money in such periods as the recent one, because you have the most exposure. Yes, you have that open equity “cushion” but you also have an accelerated account drawdown because you were at high exposure. Other than sitting through your stops getting hit, is there any other process that can reduce exposure/take profits in such periods as the recent one?