Are you looking for a roadmap to risk for the next 12 months? David Gaffen of the Wall Street Journal recently highlighted what he considers to be the top five risks facing investors in 2008:

(1) The threat of a U.S. recession - "[A recession] would mean a hit to corporate earnings, which are already on the down slope, making it much harder for banks to clean up their problems and could turn a U.S. problem into a global problem."

(2) The potential for bubbles to burst in emerging markets such as China and India

(3) Cheap stocks that are cheap for a reason - "When a stock sector has been knocked around, it is tempting to try to jump in for cheap stocks. But shares can bounce around a bottom for a long time, or keep falling. It happened after the technology stock bubble in 2001-2002. It could be the case for financials in 2008."

(4) "Agflation" in commodities such as wheat, corn and soybeans

(5) Volatility in financial markets

While numerous risks exist for 2008, "plenty could go right in 2008." The consumer could keep on spending, banks could resolve their mortgage problems, and the threat of inflation could gradually disappear. That being said, though, it's important to have a healthy respect for risk and how it might affect your portfolio.

For members of the TradeKing community: What do you think is the greatest risk facing investors in 2008?

[image: Risky Business]