January 2018

Vital Investing Risks

By Ray Mullaney
Originally published in Senior Digest

First, three reasons to read what follows:

  • I do not sell stocks or any financial products,
  • I am the president of an Institutional Investment Risk research company, and
  • This article will help you better understand investment risks, and reduce investment losses.

 Investment Facts Financial Advisors May Not Know:

  1. No one can predict the future.
  2. Any stock can fall by 50% or more.
  3. The stock market might fall by 50% or more, at any time.
  4. No one knows when a stock or the market will fall or rise.
  5. No one knows when or if your stock or the market will recover from a loss.

Therefore, Investing is always very risky!

Why believe or trust anyone who tells you investing is safe? Why believe or trust anyone who is unaware of these facts?

Here’s an additional fact which I hope will cause you to be far more careful investing in the future: “Since March of 2009, the Standards & Poor’s Index has risen about 250%. However, even in this period of extraordinary “average” gains, 54% of all individual stocks with a market value greater than $1 billion dollars have fallen by 50% or more during this bull period”.

The above statements are facts, not opinions. Based on those facts alone, investing could be considered nothing but gambling. Many wise people never put a dime into stocks.

However, based on my 40 years of investing experience and the statistical research of my company, here are five compelling additional facts to consider:

  • While there are no reliable statistical models to estimate a company’s profit potential, there are reliable methods to estimate a company’s financial
  • Based on back-testing over several decades, stocks with very low risk profiles* greatly outperform stocks with higher risk profiles*.
  • The risks of loss rise in direct proportion to increases in major stock market indices. This means the longer you stay invested after the market rises, the greater the chances your investments decline, and the opposite is also
  • To protect your savings and avoid losses, invest only after major market And sell all or the majority of your investments after major market increases.
  • Don’t try to “time the market” – measure risks with precision and avoid all risky companies and all companies that trade at risky prices!

In our next article, we discuss some details about HOW to identify the attributes of “safer” versus riskier companies. Some highlights of what we’ll cover in our next article about investing:

  • How much debt is too much;
  • How to interpret the financial trends of the balance sheet;
  • How you can measure a company’s “financial strength”,
  • How important is the “price” of a stock;
  • How developing a reliable and conservative estimate of a company’s minimum value can save you a fortune;
  • A step-by-step system YOU can follow to develop a reliable estimate of a company’s value; and
  • Where to find reliable information about stocks.

Remember, a company’s stock or the overall stock market can decline dramatically and stay very low for decades. So, avoiding risks is vital to your financial security. We can help!

My best to you,

Raymond Mullaney


*Our next article will cover our precise and proprietary definition of the word “risk”.