"Risks in stock trading" - A Kotak Securities review

Risks in Stock Trading

What does a Market Risk imply?

Market Risk
This is the risk of investing in the stock market in general. It refers to a chance that a security’s value might decline
Although a particular company may be doing poorly, the value of its stock can go up because the stock market value is collectively going up
Conversely the value of the stock might drops because of negative factors inflation, rising interest rates, political instability etc.

What does an Industry Risk
imply?

Industry Risk
This is risk that affects all companies in a certain industry
For e.g. Utility companies, are often viewed as relatively low in risk because the utility industry is stable and operates in a predictable environment with relatively little change
In contrast, internet and other technology industries are usually viewed as high in risk because the industry is changing so quickly and unpredictably

What does a Regulatory Risk
imply?

Regulatory Risk
Virtually every company is subject to some sort of regulation. It refers to the risk that the government will pass new laws or implement new regulations, which will dramatically affect a business.

What does a Business Risk
imply?

Business Risk
These are the risks unique to an individual company
It refers to the uncertainty regarding the organizations ability to perform business or provide service
Products, strategies, management, labour force, market share, etc. which are among the key factors investors consider in evaluating the value of a specific company

Risks in Stock Trading
Remember:
All stocks are affected by market risk
All stocks within an industry are subject to industry risk
All stocks are subject to regulatory risks due to government policies and a company can be affected by business Risk

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Registered office: Kotak Securities Limited, 1st Floor, Bakhtawar, 229, Nariman Point, Mumbai - 400021. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230/INE 011207251, OTC INB 200808136, MCXSX INE 260808130.
Disclaimer: Investments in securities are subject to market risks, please read the SEBI prescribed Combined RDD prior to investing.
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"Risks in stock trading" - A Kotak Securities review

by Kotak Securities on Sep 13, 2010

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"Risks in stock trading" - A Kotak Securities review — Presentation Transcript