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Market Risk

Even if you're a great stock picker, it's tough making money holding stocks in a bear, or downtrending, market. On the other hand, you can make lots of mistakes and still rake in profits in strong markets. That's where the market expression: “Don't mistake a bull market for brains,” came from. Consequently, overall market risk is an important factor in the risk equation.

Of course, predicting future stock market direction requires knowing which way interest rates, inflation, and a host of additional economic factors are heading. Economists spend their careers trying to discover the answers to these questions, usually without much success.


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