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Jun 30, 2021 • 10 tweets • 3 min read
How investing in index funds reduces but does not eliminate risk?
Sources of risk in:
• Stocks: Stock specific + Market specific
• Active funds: Fund manager + Investor + Market specific
• Index funds: Market specific
🧵A thread👇
2/ Stock risk:
Stock specific or unsystematic/idiosyncratic risk deals with what the company does or what the market thinks of it.
This risk leads to both
• multi-baggers like Wipro, Infosys or HDFC
• wealth destroyers like Satyam and Suzlon