Investment risk is the probability or likelihood of loss in relation to a particular investment. In the last newsletter we discussed business risks as some of the most apparent investment risks when purchasing shares of a listed company. But there are plenty of investment risks that are not business risks. In this newsletter we discuss our approach to some of the investment risks that we consider important in analysing opportunities. For example, the market is more positively biased than negatively biased, leading to forecasting assumptions that are, by and large, too optimistic. The chart below demonstrates that investment analysts are generally too bullish on the outlook for company earnings, leading to a gradual lowering of earnings expectations over the course of a given year. In this report we explore this risk in more detail, as well as four other key risks we consider in our processes.