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Definition

<p style="text-align: justify;">The <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">risk</span> which attaches to the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">market</span> itself as opposed to the risk that attaches to a specific <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">share</span> (<span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">unsystematic risk</span>). This refers to the risk you take when <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">invest</span>ing in shares that the market itself will fall. It is very important for an investor to first establish if the market is in a <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">bull trend</span> or <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">bear trend</span> before putting their money into the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">share market</span>. You can easily do this by looking at certain <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">indices</span> such as the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">S&P500</span> and applying a <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">moving average</span> to your <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">chart</span>. Once you are certain the market is in a bull trend the systematic risk is much lower. As a general rule, approximately 70% to 80% of a share's moves will be determined by systematic factors and only 20% - 30% to unsystematic factors. This is especially true for large, <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">blue-chip</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">companies</span>.</p>