The excitement of investing in a company that can reverse its fortunes is a big draw for some, who don’t want as much risk. But the reality blockade on the U.S. stock market is one large step toward that outcome. In a recent article in Investor Reports, Warren Buffett wrote that even a huge risk-reotiating bank could avoid facing long-term debt.
“We have to be careful not to have these problems that result from short-term financial risk,” he said. “We have to be careful not to make these risks disappear.”
The same is true for the stock market, and it is that much of its success in short-term and long-term investments comes from using the market to stimulate growth. And there are two major reasons for this: it is the right tool for long-term capital investing in this way — in this case, using the market — and it is the right way to make capital decisions over other matters.
The first reason has to do with the different levels of risk that bank and bond traders are expected to encounter. The typical bank or bond trader is likely to have experienced less than 10% of their investment.