What is perhaps the greatest risk to individual investors these days?
Is it the potential for a decline in corporate earnings based on a slowing global economy? Is it that current valuation levels in both equities and fixed income instruments are much nearer historic highs than not? Is the biggest risk a US Fed that will soon raise interest rates for the first time in close to a decade?
Although all of these are specific investment risks we face in the current cycle, my contention is that the single largest risk to investors is a risk that has been present since the beginning of what we have come to know as modern financial markets. The single largest risk to investors is themselves. By that, I mean the influence of human emotion and psychology in decision making.
We Are Our Own Worst Enemies...
Human Emotions Meet Animal Spirits...
The Margin Debt Time-Bomb...
Broken down in 3 segments, the rest is at the link above...
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