Stock investing has several layers of risk and a company can perform well while its share price falls.
Market risk
Broad markets can decline because of economic, rates, geopolitical or liquidity conditions.
Business risk
Demand, competition, execution, regulation, customers and technology can change company economics.
Valuation risk
Good earnings can still produce poor returns if the starting valuation embeds excessive expectations.
Process risk
Concentration, leverage, overtrading and acting on unverified tips can amplify losses.
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