Risk comes from not knowing what you're doing Most investors and their financial advisors would talk about 'risk', but very few understand this term. Most believe that risk lies in a stock falling by 20 percent or more. There are others who think that risk lies in a stock falling at a faster pace than the fall in overall markets. But as Buffett says, the risk of holding any stock (or for that matter, any investment) is only the 'permanent loss of capital'. A permanent loss of capital occurs when a stock goes down because of worsening business operations and stays down for a very long time or even forever. For example, if a company goes bankrupt, or its earnings power drops permanently, then shareholder value will also become permanently diminished. And investors suffer such permanent loss of capital when they don't know what they are doing with their savings. It's important for you to know what you are getting into or simply having the understanding of the business whose stock you are buying. So, I'll repeat, do your own homework before investing in a stock and buy only when you are convinced that the company isn't going to go down the drain in the future. And always remember this risk comes from not knowing what you are doing, in life and in stock market investing. The author is Vishal Khandelwal, promoter of Safal Niveshak. Vishal, with his vast experience as a stock market analyst trains people to become sensible and successful investors. You can read his articles and reach him through https://www.safalniveshak.com