Friday, 14 December 2012

Investors Seek Alternative Investments to Reduce Stock Risks

In 2008, many investors experienced the hazards of stock ownership, firsthand. The result was devastating losses and a growing fear that they would not meet their investment or retirement goals, without holding on to stocks for the long-term. Although the desire to recoup losses is understandable, behavioral economists have shown that it can cloud an investor's judgment and cause them to take more risk, than they can handle.

Nowadays, investors have been lulled into thinking that long-term stock investing, greatly reduces their investment risk. The truth of the matter is that stocks are risky, no matter how long you hold them. Even though findings from a recent research paper by Ned Davis Research Center, reported that equities will perform better than some other traditional investing options, especially when compared to safer investments; like high-interest savings accounts (for example). Most investors believe that is as it should be. Higher returns should modestly compensate investors for taking the added risk. However, this in no way implies that stocks will become less risky, over time.

Despite the assurances of the financial industry, stocks are always a risky investment and the longer investor's hold them, the better chance there is that an economic downturn; will blindside the investment community. Because stocks don't always perform the way investor's would like, and diversification of a stock portfolio cannot eliminate/reduce the investment risk, confused investors are seeking alternatives to improve the over-all performance; of their traditional investment strategies.


  1. Stocks are just plain risky to begin with. They are unstable, unreliable and many investors just don’t trust them any more. It’s a good thing there are alternatives.

  2. It is a good thing that investors now have alternatives because it wasn’t always that way. For many years in the past, the only “alternative” was taking a chance on the stock markets. Nowadays, investing in stocks is putting many retirement plans in jeopardy just thinking about it. Now smart investors look to hard asset alternatives in particular, for profitable returns and some peace of mind about their future.

  3. Buy low sell high. That is the key to stock investments. But what happens when it stays low or gets even lower? Stock analysts just say hold onto it for the long-term in the hopes it turns around. The reason they say this is because they don’t want investors pulling their stock out and putting it elsewhere which in turn leads to an devaluation of the entire stock value.

  4. Traditional stock investments are now viewed as risky at best given their poor recent performance on the world stage in the last five years. Investors have now discovered other profitable options and are willing to give them a chance as many of them come with less associated risk compared to stocks while delivering constant above-average returns.