All financial investments come with risks. Investing in stocks can come with several pitfalls, such as volatility; prices can fluctuate up and down over short periods of time, making it difficult to predict how a stock's value will change. Company performance is also a risk. Investing in individual stocks means that your returns are tied to the performance of the company. If the company performs poorly, the value of its stock can decline, potentially leading to losses.
The stock market can also be impacted by broader economic conditions, such as recessions, interest rate changes, and geopolitical events. Liquidity is also a factor. Some stocks can be illiquid, meaning that it may be difficult to buy or sell them at certain times or at a fair price. And, timing is vital. Trying to time the market and buy and sell stocks based on short-term trends or fluctuations can be risky and may not lead to optimal returns over the long term.