Risk management is a core part of financial planning. Every investor, whether holding Apple, Amazon, or Tesla, needs strategies to preserve capital.
## Key strategies
– **Diversification:** Spread sector risks.
– **Stop-loss orders:** Automatically sell stocks if they drop by a set percentage.
– **Hedging with options:** Acts as insurance.
– **Safe assets:** Defensive components reduce volatility.
## Benefits
– Prevents catastrophic losses.
– Encourages rational decisions.
– Stable portfolios perform better over decades.
## Examples of risk events
– Dot-com bubble: overexposure to tech wiped out fortunes.
– 2008 crisis: buy hexcel shares those with bonds and defensive stocks fared better.
– Balanced portfolios weathered the storm.
**Conclusion**
Risk management is as important as stock selection. Investors who diversify with Apple, J&J, ExxonMobil, and bonds are better prepared for downturns.
