In this lesson, delve into the intricacies of market risk and the power of diversification with Nick Palazzolo, CPA. He breaks down the two main types of risk associated with companies: market (systematic, non-diversifiable) and firm-specific (unsystematic, diversifiable) risk. Nick demystifies these concepts by connecting them to real-world events, such as war and political incidents that impact every company, explaining how they cannot be mitigated through diversification. On the flip side, he illuminates how firm-specific risks, like labor strikes or loss of key accounts, can be greatly reduced by spreading investments across a variety of industries. This insightful discussion weaves through portfolio theory and its application in minimizing risks that are within an investor's control, arming you with the knowledge to distinguish between risks and strategize accordingly.
Lesson: Market Risk and Diversification
In this lesson, delve into the intricacies of market risk and the power of diversification with Nick Palazzolo, CPA. He breaks down the two main types of risk associated with companies: market (systematic, non-diversifiable) and firm-specific (unsystematic, diversifiable) risk. Nick demystifies these concepts by connecting them to real-world events, such as war and political incidents that impact every company, explaining how they cannot be mitigated through diversification. On the flip side, he illuminates how firm-specific risks, like labor strikes or loss of key accounts, can be greatly reduced by spreading investments across a variety of industries. This insightful discussion weaves through portfolio theory and its application in minimizing risks that are within an investor's control, arming you with the knowledge to distinguish between risks and strategize accordingly.
Updated: May 31, 2022 Create an account