Financial Risks

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Key Words from this lesson: Financial Risks, Debt, Price, Understanding of Value.

Financial Risks in investments can arise from:
- Too much debt.
- Overpaying with a high inital price.
- Lack of understanding of the asset's true value.



Important Points:
- Debt is borrowed capital to speed-up time (for expanding businesses, make big purchases...etc).
- Volatility does not equal to risk for a long term investor, it presents buying opportunites when the price of an asset become undervalued. (It only become a risk if you are forced to sell at a bad price, which can be the case if there is excessive debt - for a person, a comapny, or a country).

Great Quote:
- Only when the tide goes out do you discover who's been swimming naked.
- Price is what you pay, value is what you get.


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