Why Markets Work!
Markets throughout the world have a history of rewarding investors for the capital they supply. Companies compete with each other for investment capital, and millions of investors compete with each other to find the most attractive returns.
This competition quickly drives prices to fair value, ensuring that no investor can expect greater returns without bearing greater risk. . .
How You Manage Risk Effects Your Rate of Return
Most people are afraid of the market. When the market goes whacky, it is time to pull your chips of the table and wait out the storm. Yet, historical evidence shows that those who stay invested in a properly managed and diversified portfolio will be better off in the long run.
So risk (volatility) really determines results. If you have no tolerance for risk, then you would choose to put your money in treasury bills, as an example. But in reality you have traded one risk for another. . .
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