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10 Risk Factors Affecting Equities

Changes in Law, Regulation or Government Policy

So-called legislative risk is the risk that the government may alter laws or bring in new tax policies that change the basis on which previous investment decisions have been made.  Legislative risk is viewed as a huge risk by investors – what was given as a competitive advantage by one government may then be taken …

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Poor Management (of Funds or Companies)

Poor risk management by an investor or fund manager, such as failing to identify risk, sub-standard analysis, inability to adequately mitigate and so on, can lead to a loss. Poor risk-management decisions can escalate rapidly with catastrophic consequences. The financial crisis of 2008 can be traced back to the poor decisions made in the subprime …

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Lack of Diversification

Investors manage risk by ensuring that investments are spread across a diverse range of products and markets. By investing in different areas and types of assets, investors hope to both maximise investment and reduce the risk of loss. Investors expect their brokers to help them build portfolios that meet their investment objectives.  Diversification, which is …

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