Quora Answer: How Risky is Investing in the Stock Market?

The following is my answer to a Quora question: “How risky is investing the stock market?  What mitigates the risk?”

There are all sorts of risk in investing in the market.  But like learning to swim, it is extremely risky if you have no idea what you are doing, or if you have no discipline, or you engage in risky behaviour.

Over an extended horizon, a well-balanced and diversified portfolio will always earn.  The market rises naturally, and rewards people who think long-term and do their homework.  Investing in the market is for people who have done their homework, and understand the underlying conditions of companies, counters and instruments.

The market is risky because too many people treat it like gambling.  They “invest” based on tips and market sentiment, instead of looking at market fundamentals.  These are the people who tend to lose.  For them, the market is extremely risky.