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RE: #5/ INVESTMENT RISK !!! HOW TO MANAGE IT ?

in #risk7 years ago

Another great post. Keep up the great work. Your posts help me.

Concerning interest risk, we here in the United States are looking at rising interest rates. The Federal Reserve has been keeping interest rates artificially low here. It's been making getting loans easier, but it hurts many elderly folks on a fixed income and with savings accounts that don't pay much interest at all. I suppose government manipulation is something to consider when thinking about interest risk.

Concerning credit risk, that is what caused the terrible securities crash in 2008 with Goldman Sachs and others getting bailed out by the government. From what I understand, mortgage backed securities failed and insurance on them couldn't pay up, so the government printed (nowadays it's just an entry in a digital ledger) trillions of dollars to bail them out. Sometimes being politically connected can mitigate credit risk, but at the expense of taxpayers and the correcting "invisible hand" of markets. As a side note, I understand some people got rich from credit default swaps during the crash of 2008. Ever seen the movie "The Big Short"? It sadly never mentions the role of the government in fueling the mortgage crisis with Fannie Mae and Freddie Mac buying up the mortgages at break neck speed, but it does explain a bit about some of the financial shenanigans that go on. And it's hilarious. https://en.wikipedia.org/wiki/The_Big_Short_(film)

Concerning inflationary risk, take a look at Venezuela. That government has destroyed their money through inflation to the point of their bolivar is so worthless people don't want it. People buy US dollars in the black market. I suppose inflation is another risk where you must account for government manipulation. On another side note, cryptocurrencies like Steem and Bitcoin help people in bad situations like Venezuela where politics has destroyed the money used to value worth in the country. Cryptos could feel that need when governments destroy money.

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I appreciate your remarks, Indeed a lot of investors find their path to investing field more easily with the help of cryptocurrencies. That's why we can notice the huge number of investors in this field which is still increasing with a terrifying speed, it gives them more opportunities and chances to handle the inflation risks .Moreover, cryptocurrencies are also known to be destroying the central banking and making it easier for everyone in the world to make his own success and realize their dream. That's why investing in them is a bless for all and especially in this era . Concerning the film you have mentioned in your comment I ll make sure to watch it, so thanks for your adding , it is always a pleasure for me to receive such a great adding . I will try to develop even more my coming posts and try my best to share good information with everyone .