Risks of investing, as well as losing hard earned money, can be some of the most emotionally draining things an individual can go through. The stock market is full of emotional highs and lows. Welcome to the world of investing where most investors lose money due to poor decisions and lack of knowledge. People often get the misconception that investing in the stock market is the same as going into a casino and gambling money. The difference about investing in the stock market and gambling in a casino is that investing in the stock market isn’t gambling when you have enough of the correct information.
In the stock market, investors are constantly trying to assess the profit that will be left over for shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and so are the future earnings of a company. Information Measurement Theory, as taught by Dr. Dean Kashiwagi, proves that when an individual has the necessary information, they can predict the outcome of an event because it can only happen one way. We can apply this same concept to investing in the stock market. The researchers wanted to solve the following: maximize returns while minimizing risk and stress.
Full Paper – Stock Market Risk