The stock market has hosted a number of incredible success stories throughout history, but it's also littered with spectacular failures, which is why risk management is so important for investors.

Discipline is especially important when new, trendy investment opportunities like artificial intelligence (AI) sweep the market and drive enormous gains in individual stocks. This year alone, shares of semiconductor giant and AI pioneer Nvidia (NASDAQ: NVDA) soared a whopping 220%. But the stock also suffered a peak-to-trough decline of 18% between August and October alone, which is a lot of volatility for the average investor to stomach.

While Nvidia is a fantastic company with the financial results to back up the gains in its stock, it's not the only player in the AI industry. The same way many internet companies didn't survive the dot-com era in the early 2000s, not every AI company will achieve lasting success.

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Source Fool.com