Keep in mind, however, there is risk in being under invested or not in sufficiently high beta stocks if the market does rise. Now let's talk about quantifiable risks. Beta - This refers to how a stock moves vs. the market. If a stock moves more than the market, it has a high beta. If it moves little vs. the market it has a low beta.
Technology generally has a high beta while Utilities have low betas.
A portfolio of high beta stocks in a down market can create extreme downward movements, while up-markets can cause tremendous performance. If a market is demonstrating extreme risk, it is wise to raise cash, lower the beta of your portfolio, and even consider some hedging of exposure. Valuation - This risk essentially deals with fundamental tools for determining fair value and the extent to which a stock is over or under valued. Looking at these ratios in a vacuum is useless. Therefore, these ratios should be assessed against comparable ratios for the industry, the range of such ratios for the company itself, and the range of such ratios for the market as whole.