Investors should consider both market and nonmarket risk from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
Investors need to recognize that there are risks associated with investing that go beyond just market fluctuations. While market risk is a common concern for investors, nonmarket risk factors can also have a significant impact on investment performance. Nonmarket risks can include political instability, changes in government policies, natural disasters, and other events that are not directly related to the performance of the financial markets. By considering both market and nonmarket risks, investors can make more informed decisions about their investment strategy. For example, diversifying across different asset classes can help to mitigate market risk, while considering nonmarket factors such as geopolitical events can help to protect against unexpected losses. It's important for investors to take a comprehensive approach to risk management and consider all potential sources of risk when making investment decisions. Ignoring nonmarket risks can leave investors vulnerable to unexpected events that could have a negative impact on their portfolio.- By being aware of both market and nonmarket risks, investors can be better prepared to navigate the complex and ever-changing landscape of the financial markets. This holistic approach to risk management can help investors to achieve their long-term financial goals while minimizing potential losses.
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