When you invest your money in the stock market, the possibility exists that the market will drop exactly when you need your money and want to sell shares. This happened in a major way in the fall of 2008. If you needed your money in cash at that time, you were out of luck. The risk is inherent, and that is why we recommend that our clients avoid using money that they may need within the next 3-5 years; money that they would use for a down payment on a home, for example.
If you do not need to sell shares when the market is down, however, your losses are only on paper. A wonderful business is a wonderful business in good and bad markets. There are times when your shares are worth less, and conversely, there are times when your shares are worth more. At Emperor, we think of "risk" as the possibility of losing money. Because we invest in historically successful businesses, the risk of losing your money is very low.