Main causes of concern of investors when they invest in Vietnamese stocks
What are the main causes of concern of investors when they invest in Vietnamese stocks?
We can identify 5 really common causes of concern: Country risk - Currency risk - Liquidity risk - Legal risk and the last one the fear of losing everything. Many people fear to lose everything when they invest in stocks even though it is not difficult to avoid this prospect. In fact the only people who lose everything when they invest in stocks are those who make one (or both) of the following mistakes: first mistake their portfolio lacks diversification. If you own only one stock and this company goes bankrupt you will indeed lose everything. Second mistake often seen is that these people who are at risk of losing everything often use leverage. Leverage is a highly risky tool that should be avoided by most investors. For instance if an investor uses a leverage of 2, if the stocks he or she owns fall by 50% he or she would have lost everything. These same stocks could well regain this 50% later on this will be too late for the investor. If an investor uses a leverage of 4, his or her stocks will just need to fall by 25% for losing everything. One should keep in mind that volatility can be high in stock markets, even in stock markets of developed countries it is not rare to record temporary falls of 30% or more. This is even more the case in sock markets of emerging countries.