NASD issued an Investor Alert today to remind investors that marketplace risks are just as important to consider when evaluating particular investments as are specific business risks.
NASD's Investor Alert, Market Risk: What You Don't Know Can Hurt You, outlines the various types of market risks investments may be exposed to and describes the steps investors can take to minimize those risks. The Alert explains that common market risks are dependent on the nature of the investment and may involve international, as well as domestic, factors. The Alert is being published for investors around the world through the efforts of the International Organization of Securities Commissions.
"Assessing risk can be a daunting task for any investors, especially with the increasing globalization of financial markets," said Elisse Walter, NASD Senior Executive Vice President. "By issuing this Alert, we hope more investors will better understand market risks before investing and take the necessary steps to manage those risks."
The Alert explains that while investors cannot completely avoid market risks, investors can help mitigate certain risks by diversifying their investments - not just at the product or sector level, but also in terms of region (domestic and foreign) and length of holdings (short- and long-term). The Alert also explains that by selecting investments that are less likely to fluctuate with changes in the market, investors can help minimize risks to a certain extent.
Additional information on making informed investment decisions is available in NASD's Smart Investing series, including Smart Bond Investing, which covers the basics of bond investing and also provides easy access to real-time bond prices and transaction information. Smart 401(k) Investing provides answers to questions about saving for retirement, including risk, asset allocation and diversification. To receive NASD's latest Investor Alerts and other important investor information via email, sign up for NASD's Investor News.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD offers a broad range of tools and programs to help people better understand investing and know how to protect themselves along the way — including developing and publishing Investor Alerts, brochures and online resource guides on such critical topics as mutual fund class shares and 401(k) and college savings plans. NASD has distributed this information through its Web site, printed materials and Investor Forums.
NASD touches virtually every aspect of the securities business — from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at www.nasd.com.
("Copyright 2007 National Association of Securities Dealers, Inc.")
