When it comes to stocks, bonds, and portfolios, diversification is important because there is risk correlated with all stocks. There are different kinds of common and preferred stocks, but they all carry the risk that returns may not be equivalent to investments. Risk can be defined as, "any uncertainty concerning your investments that has the potential to negatively impact your financial welfare," (FINRA, n.d.). While investors can attempt to mitigate these risk factors, not all risks can be eliminated. Some common risks that impact the price of stock shares are global conditions and corporate decisions (FINRA, n.d.). Global conditions including war, recession, and crises can cause an overall sense of distrust in the economy, which leads individuals to be more careful with their money. This means they are less likely to invest in the stock market which may lead to market decline. Corporate decisions include any large decision that leadership makes within a company. Things such as bad mergers and poor leadership decisions make people more likely to sell off their stock and stop investing. This mass exodus can decrease the price of the stock. 

Tesla (TSLA) is a NASDAQ publically traded stock that has been rising as of late. Today, the price of the stock was $241.05, which is down 6.06% from yesterday, but the company is up 19.8%, overall, in June (TSLA, n.d.). I believe that corporate decisions absolutely impact the price of Tesla's stock. Tesla's owner has made a lot of large-scale decisions lately including purchasing Twitter, building rockets, and introducing new vehicles to the car industry. While Tesla is a car company, its owner dabbles in many different industries. Considering the vehicle industry, supply chain shortages definitely impact the price of the stock. Supply chain issues cause delays in new vehicle availability, raise the price of used cars, and leave customers waiting. When customers are dissatisfied with their vehicle customization, delivery, or availability they are less likely to invest in a stock, limiting investor and capital availability. This is an important factor because it is completely outside of the vehicle manufacturer's control. This demonstrates how little control industries have over the price of their stocks. 

Question: What stocks do you believe are most negatively impacted by global turmoil such as presidential elections? Why? 

Answer rating: 100% (QA)

Stocks that are most negatively impacted by global turmoil such as presidential elections are often those in sectors that are highly sensitive to econ... View the full answer