Risk should be the first and foremost thing on an investor’s mind when he or she sets out to deploy capital. But risk involves having negative thoughts. That is why many investors tend to focus on potential returns rather than think about risks because the idea of a big reward is far more appealing. Investors also need to understand what risk is. Share price volatility, for instance, is not risk. Instead, risk represents the possibility of you suffering a permanent loss of capital, arising from either a loss that you’ve locked in or an investment gone awry due to poor business fundamentals. Investors also need to know that risk is contextual, and may manifest itself differently for different investors. That said, there are some risks that you should be wary of as they apply to investors across the board. These relate to your understanding of the business you are investing in, portfolio composition and warning signs that may flash danger....