Forum Archive Index - January 2002

["Mark Roylance" <malarki@ihug.co.nz>]

Can't really agree there.

 

Although I agree that you can actively manage the risk inherent in shares, fundamentally you are playing in a game where the invested capital is vulnerable whether or not the company in which those shares were purchased is in dire straits or good health.

 

The volatility of shares must be classed as high risk, even if you are taking measures to reduce the downside for yourself, because the share price may rise and fall irrespective of what your position was. The value of your investment is determined, within your risk reducing guidelines, by the market.

 

The risk of investing in a dodgy contributory mortgage company paying a high premium of interest to compensate is a different type of risk altogether. Your capital and interest is fixed and safe, or not, depending on the health of that company's business.

 

Both forms of investment have a degree of high risk in a way that can be managed. They're certainly not low risk investments.