MARKET RISK

Market risk is the uncertain of return caused by market cycles, sudden market movements, and changes in public fashions among investment alternatives. Although market risk is unique in that the uncertain return applies to a particular investment or class of investments, it is a risk caused by factors that have little to do with the fundamentals of the investment. Market risk is more a matter of investor psychology than it is of financial analysis. Market risk is especially important to investors who may need to liquidate an investment on relatively short notice. The risk is that the liquidation may occur during a down portion of the investment cycle.