STOCK MARKET FOR BEGINNERS ? High Risk Investments

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Let’s talk stock market for beginners! What are the riskiest investments you can make? Here are the types of investments with the highest risk. With greater risk comes greater potential reward. High risk investments are not suitable for beginners, and they should be left to the professionals who have a complete understanding of the risk associated with these types of investments. Out of curiosity, we are going to talk about some of the riskiest things you can do with your money as in investor.

Riskiest Investments (In no particular order)

1. Short Selling Stocks

Short sellers bet against a stock. They borrow shares at a high price and once the stock goes down in value they cover the short by buying them back. The difference in the price is the profit margin for the investor. The risk with short selling is that losses are potentially infinite, and you can lose significantly more than your original investment.

2. Options

Options are a derivative security because the price of an option is intrinsically linked to the price of something else. Options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price or before a certain date. The prices of market options change quickly and they can be unpredictable. Large sums of money can be won or lost in a very short time.

3. Futures

A futures contract is a legal agreement to buy or sell a particular commodity at a predetermined price and at a specified time in the future. This is a speculative investment that is very similar to options. Futures trading offers leverage up to 95% in some case and greater leverage magnifies the effect of any price change.

4. Exploratory Drilling

Exploratory wells are dug to find new reservoirs. A well that returns fossil fuels can mean big money for investors. This is a high risk and high reward bet. If the exploration comes up dry, this could result in 100% loss of the investment.

5. Penny Stocks and Day Trading

Penny stocks provide investors with volatility, unpredictability, low liquidity and a huge potential for wins and losses. Penny stock companies are known for having bogus information and the stock price can easily be manipulated. Day traders often trade penny stocks due to their volatility and they make money on the price moves. This is a very risky investment. Roughly 10% of day traders are successful. Stock market for beginners investors should avoid this type of investment.

6. Junk Bonds

These are companies rated or downgraded to below investment grade. As a riskier investment, they pay higher interest rates. There is a greater chance that these companies will default on their obligations.

7. Leveraged ETF

This is an exchange traded fund that employs leverage. The funds are linked to an underlying index or other benchmark. For example, an inverse ETF might follow the S&P 500 index and it will drop twice as fast as the index rises and rise twice as fast as it falls. Some leveraged ETF’s trade at a multiple as high as 5.

8. Emerging Markets

Companies that form in underdeveloped regions of the world can show explosive growth and returns. They are also investments that can involve political risk, military risk, currency and exchange risk. There may also be foreign taxes and tariffs involved. Reliable information is very difficult to find as well.

9. Initial Public Offering

Initial public offerings often over promise and under deliver. Companies going public have very limited information available. A lock up period may affect the stock as well. This is when insider investors are held from selling shares for a period of time. Once they are allowed to sell this can put immense bearish pressure on a stock.

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.

Comments

Ryan Scribner says:

If anyone is looking to open a stock trading account, I highly recommend Robinhood as they offer free stock trading. I recommend them because this is the stock broker I use. Unlike traditional brokers, they do not charge commission on trades or require a minimum account balance. If you are interested in signing up, here is the link:

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Be kind to one another says:

What is your opinion about Vrx stock? Is it a great buy? Take a look at it.

Be kind to one another says:

I love watching all your videos because I can see so much passion in them. Btw I have watched every one of your videos, love them. Keep it coming.

Stocker says:

Options are not always that risky. Especially if you are just selling puts or calls instead of just full on buying/selling the stock.

Roni Nevels says:

thanks a lot

Chan Choi says:

Option is a great tools . You can use it for income trade or leveraged tools to increase return

Logic Flakes says:

Hey Ryan, What platform do you use??

Matteo Sfrisi says:

Hi Ryan, thanks for another awesome video. Are you maybe interested in doing a video regarding bitcoin and cryptocurrencies? Why are they getting so high in value? Thanks again and keep up the good work!

Silver66 says:

Very informative video. I am a long-term, buy-and-hold investor.

Jonathan Deese says:

Love the videos man! So much valuable information in such a short time! Thank you so much

Mick'Arooney Gonzales says:

How do you get around the high entry cost of a mutual fund?

Freeman Fry says:

Great video. Turns out that I've technically been trading penny stocks w/o realizing it. To me the definition was less than $1/share and not on a major exchange. Didn't realize that it referred to all stocks under $5.

Logan S says:

Ive been tempted to do 2 shorts ever. One was CMG at 750 per share. Dropped to 360 (Would have covered at around 450 i think) and I was recently tempted to buy a june 16 320 strike price put lot on tsla for $1150. Would have been worth 2 grand a few days ago and I probs would have sold it. Never have had the guts to actually short something and I really dont think I will ever end up shorting anything.

Bend Metal Fitness says:

Yesterday was a great day, everything was on sale! Hey? Can you do a video on Alibaba and opinions?

Road to the 2 Comma Club says:

I can definitely vouch for options being risky, during yesterday's sell-off I lost $16k lol. Btw I'm the guy who was in the video on options (thanks again Ryan!) but yeah you gotta have thick skin for sure when buying call options. There are tons of other different strategies you can do with options (iron condors, straddles, etc.) that can be less risky but you definitely gotta know what you're doing. Great video Ryan!! 🙂

Virat Chhikara says:

The market I invest in, Indian stock market, is emerging but it ain't more risky than USA's, I guarantee.

thomas terrence says:

Love the videos man, keep them coming. Honestly surprised you don't have more subscribers already.

Ryan Scribner says:

Make sure you hit that ? to be notified of uploads as soon as they happen! Today we are talking about some of the investments with the highest amount of risk. I will be doing a follow up video soon on the lowest risk investments as well!

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