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January 21, 2024, 02:39:54 AM |
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The truth is that there is no market which is totally risk averse. While most markets have some risks associated with them, there are markets far more risky than the others, for example the Crypto and Pharma industry. Pharma like Crypto is a very volatile sector. The ever-changing landscape of drug approvals, clinical trial outcomes, and regulatory processes can make shares and stock values rise and fall at any given time. While a pharma stock can rise ∆ exponentially, especially when there is news of a successful drug trial or a break through medication, it can also plummet drastically when companies experience regulatory setbacks or their drugs are found to be doing more harm than good. And if such happens, the stocks are likely to fall beyond recovery, reason being that pharma companies are reputation based companies, they work on trust because they deal with human wellbeing. So, any drug scandal could prove fatal to the reputation of companies in this industry. And when this happens, companies can be redlined. And sales dwindle. Therefore, investors refrain from investing further, thereby affecting share price and stock value. However, companies like Pfizer, Novartis, Johnson & Johnson, etc are more established with a long history in the business along with having a very high market cap, so they can be safer to invest in. But there are other emerging companies that are not proven, making them a lot less safe for investment, and some of them never even make a breakthrough. So, when you put it on a scale, the risk outweighs the reward most of the time. In conclusion, the world of investment is full of risks, with constant emphasis on high-risk, high-reward. But, instead of diving headfirst into an investment, take a couple of steps back to think, make extensive research and weigh the potential rewards against the inherent risks before pulling out your hard earned funds to invest.
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