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Investment Risk

Investment Risk

This systematic risk also have a big impact on stock trading market. In many cases, the more the market correction was preceded by the operation of systematic risk. For example, rising inflation, rising interest rates, the global financial market turmoil could push stock prices in the market. In fact, from the actual operations do not affect anything.

On the other hand, investors also face the unsystematic risk that originates from within or internal company. For example the value of sales fell, there was a strike of employees, decreased production and so on. For this type of risk is highly dependent on the expertise of company management. If the management company is able to overcome the internal problems the company's fundamentals will not be much affected. Conversely, if management can not manage the company well it has fundamental company will decline, which in turn will lower the stock price in the market.

From the explanation above seems that unsystematic risk is relatively more manageable than systematic risk. Even so, both have a big impact on stock price changes in the market. If the record, more detailed, systematic risk will affect the overall market, while the unsystematic risk will more directly affect a particular issuer's stock. Sometimes we see the stock price plummeted not because of the collapse of the issuer's fundamentals, but more because of the psychological. Price decline as a result of these factors not only occur in just one type of stock, but occurs in almost all stocks. Another case if the price declines resulting from unsystematic risk, price declines happen only on certain stocks.

For two types of market participants are risk deserves attention in order to avoid large losses. Expertise of market participants in detecting the existence of two types of risk that will determine success or failure of investments made. Therefore, before investing a good investor should first understand the risks that may be encountered.

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