Rice Money Managers, Inc.

Investment Risk

Is investment risk good?  Some say yes, assuming that, by taking more risk, you will, with reasonable assurance, make more money and so the risk will be worth it.  Although such a very general, very long-run relationship may exist between investment risk and reward over broad classes of investments, Rice Money Managers believes risk should be accepted carefully and warily, not casually or heedlessly.  Stocks and the stock market can be severely mis-priced creating large risks for investors that may never be justified, no matter how long they hold.  At times financial markets are broadly benign and at other times broadly dangerous.  Investors need to be prepared for both conditions.

What Went Wrong in the Stock Market?

Starting in 1995 and ending in 2000 stocks soared like rockets; since 2000 and into 2002 stocks sank like rocks.  Literally, millions of investors paid trillions too much for stocks in thousands of companies.  What caused this debacle?  It is essential for you as an investor to understand what has happened before you decide what to do next.  Rice Money Managers President Charles Rice recently published the following Editorial Commentary in the St. Louis Post-Dispatch to help investors with this question.

The Stock Market:  What Went Wrong?

Both the Efficient Market Hypothesis and the Random Walk Hypothesis have contributed to the disaster on Wall Street by reducing sensitivity to investment risk.  Active management, whether by stock selection based on the client's situation and by market timing, are better ways to go.

Legal Notice and Disclaimer

Investment advisors are required to supply prospective clients with a copy an official disclosure document, our ADV, Part II.  There is no charge; just call, write or email us.  This Web site is for informational purposes only and does not constitute a complete description of our investment advisory services. It is not intended as individual advice.  This Web site is in no way a solicitation or offer to sell investment advisory services except, where applicable, in states where Rice Money Managers, Inc. is registered as an investment adviser or where an exemption or exclusion from such registration exists. Information throughout this site, whether charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we believe are reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this Web site should be interpreted to state or imply that past results are an indication of future performance.  Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the user. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY “LINKED” WEB SITE.  Services are offered only to residents of the United States with a U. S. tax identification number.

Copyright © 2002 Rice Money Managers, Inc.