The article discusses the appeal and risks of investing in growth stocks, which typically offer high returns due to rapid growth expectations. While the S&P 500 has seen nearly 60% returns over two years, companies like Nvidia exemplify the volatility of such investments. Nvidia's stock soared due to AI demand but faced dramatic losses due to disruptive competition. Investors should be aware of the risks associated with future growth valuations and the lack of downside protection while considering growth stocks for their portfolios.
It means growth stocks are subject to exceptional risk with little downside protection to soften the blow.
Investing in growth stocks can be exciting as it promises high returns from the rapid expansion of the companies involved.
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