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The Biggest Risks (and Rewards) of Investing Always make sure you know a company's pros and cons before you invest.

By Phil Town

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

In this video, Entrepreneur Network partner Phil Town explains a few of the most significant risks and rewards of investing.

It can be risky to invest in companies without sufficient research or businesses that lack a proven track record, and you probably shouldn't trust companies with unreliable leadership.

Town recommends practicing discernment with the efficient market theory and always keeping an eye out for stocks that are price wildly below their value.

In the words of star investor Ben Graham: In the short-run, the stock market is a voting machine in the short term, but in the long-run, it's a weighing machine. This means that underpriced stocks today will often produce rewards later on.

Click the vieo to hear more from Phil Town.

Related: Set Clear Financial Goals by Making Unbreakable Promises

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Phil Town is an Investment Advisor, Hedge Fund Manager, 2x New York Times Best-Selling Author of Rule #1 & Payback Time, and Ex-Grand Canyon River Rafting Guide. Rule #1 Investing is Warren Buffett style investing, teaching you how to buy businesses on sale, with little risk and 15 percent returns. In fact, Rule #1 investing is practically immune to the ups and downs of the stock market.

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