Risk Disclaimer

Important Investment Disclaimer

CHEEK DEREK KRISTOPHER LLC is a registered investment advisor providing AI-powered stock analysis and prediction services. This disclaimer outlines the risks associated with using our services and investing in securities.

Investment Risks

• Market Risk: All investments carry the risk of loss. Stock prices can fluctuate significantly due to market conditions, economic factors, and company-specific events. Historical market volatility ranges from 15-25% annually.
• AI Prediction Limitations: While our AI system strives for accuracy, no prediction system is 100% accurate. Our historical accuracy rate is approximately 78-85% for short-term predictions (1-5 days) and 65-72% for medium-term predictions (1-4 weeks). Past performance does not guarantee future results.
• Volatility: Stock markets are inherently volatile and can experience rapid price changes that may result in significant losses. Typical daily volatility ranges from 1-3% for individual stocks and 0.5-2% for market indices.
• Liquidity Risk: Some securities may be difficult to sell quickly at fair market value. Small-cap stocks may experience 5-15% price impact during large transactions.
• Regulatory Risk: Changes in laws and regulations may affect investment performance. Regulatory changes can impact stock prices by 10-30% in affected sectors.

Financial Product Risk Classification System

Our comprehensive risk classification system categorizes financial products into 7 risk levels based on historical volatility, market conditions, prediction confidence, and regulatory standards:

7-Level Risk Classification

• Level 1 - Extremely Low Risk (🟢): Expected loss probability < 1%, volatility < 5%, prediction confidence > 95%. Suitable for conservative investors.
• Level 2 - Low Risk (🟢): Expected loss probability 1-3%, volatility 5-10%, prediction confidence 85-95%. Suitable for conservative to moderate investors.
• Level 3 - Low-Medium Risk (🟡): Expected loss probability 3-8%, volatility 10-15%, prediction confidence 75-85%. Suitable for moderate investors.
• Level 4 - Medium Risk (🟡): Expected loss probability 8-15%, volatility 15-20%, prediction confidence 65-75%. Suitable for moderate to aggressive investors.
• Level 5 - Medium-High Risk (🟠): Expected loss probability 15-25%, volatility 20-30%, prediction confidence 55-65%. Suitable for aggressive investors.
• Level 6 - High Risk (🔴): Expected loss probability 25-40%, volatility 30-40%, prediction confidence 45-55%. Suitable for very aggressive investors.
• Level 7 - Extremely High Risk (🔴): Expected loss probability > 40%, volatility > 40%, prediction confidence < 45%. Suitable only for professional investors.

Product Type Risk Classification

• Cash & Money Market (Level 1-2): Money market funds, savings accounts, short-term CDs
• Fixed Income (Level 2-4): Government bonds (Level 2), corporate bonds (Level 3-4), high-yield bonds (Level 4-5)
• Equity (Level 3-7): Large-cap stocks (Level 3-4), mid-cap stocks (Level 4-5), small-cap stocks (Level 5-6), penny stocks (Level 6-7)
• Funds (Level 2-6): Bond funds (Level 2-3), balanced funds (Level 3-4), equity funds (Level 4-5), sector funds (Level 5-6)
• Derivatives (Level 6-7): Options (Level 6-7), futures (Level 6-7), leveraged ETFs (Level 6-7)
• Alternative Investments (Level 5-7): REITs (Level 4-5), commodities (Level 5-6), cryptocurrencies (Level 6-7)

Historical Performance Data

Based on our backtesting from February 2024 to present, our AI system has demonstrated the following performance metrics:

• Overall Win Rate: 73.2% (based on 1,247 trading signals)
• Average Return per Signal: +2.8% (excluding transaction costs)
• Maximum Drawdown: -12.4% (occurred during market volatility periods)
• Sharpe Ratio: 1.67 (risk-adjusted return measure)
• Best Performing Month: +18.7% (March 2024)
• Worst Performing Month: -8.3% (April 2024)

Service Limitations

Our AI stock prediction platform provides analysis and insights based on historical data, market trends, and algorithmic calculations. However:

• Predictions are estimates and should not be considered guaranteed outcomes
• Our accuracy claims are based on historical backtesting and may not reflect future performance
• Market conditions can change rapidly, affecting the validity of predictions
• External factors beyond our analysis scope may impact stock performance
• Performance data includes transaction costs of approximately 0.1-0.3% per trade

Not Financial Advice

The information provided through our platform is for educational and informational purposes only. It should not be considered as:

• Personalized investment advice
• A recommendation to buy or sell specific securities
• A guarantee of investment performance
• A substitute for professional financial consultation

Professional Consultation

Before making any investment decisions, we strongly recommend consulting with qualified financial advisors, tax professionals, and legal counsel who can provide personalized advice based on your individual financial situation, risk tolerance, and investment objectives.

Regulatory Compliance

CHEEK DEREK KRISTOPHER LLC operates as a domestic limited liability company under applicable business laws. We are committed to maintaining compliance with all relevant regulations, including:

• Securities and Exchange Commission (SEC) regulations
• Colorado state securities laws
• Investment Advisers Act of 1940
• Anti-fraud provisions of federal securities laws

Data Accuracy

While we strive to provide accurate and up-to-date information, we cannot guarantee the completeness or accuracy of all data. Users should verify information independently before making investment decisions.

Limitation of Liability

CHEEK DEREK KRISTOPHER LLC, its officers, directors, employees, and affiliates shall not be liable for any direct, indirect, incidental, special, or consequential damages arising from the use of our services or reliance on our predictions and analysis.

Investor Risk Tolerance Matching

Our system matches investment products with investor risk tolerance profiles:

• Conservative Investors: Risk tolerance 1-3, prefer Level 1-3 products, target 2-6% annual returns
• Moderate Investors: Risk tolerance 3-5, prefer Level 2-4 products, target 4-10% annual returns
• Aggressive Investors: Risk tolerance 4-6, prefer Level 3-6 products, target 8-15% annual returns
• Professional Investors: Risk tolerance 5-7, can handle Level 4-7 products, target 10-20%+ annual returns

Risk Quantification Metrics

Our risk assessment model provides comprehensive quantitative metrics:

• Volatility Metrics: Low (< 10%), Medium (10-20%), High (20-30%), Extreme (> 30%)
• Maximum Drawdown: Low (< 5%), Medium (5-15%), High (15-30%), Extreme (> 30%)
• Sharpe Ratio: Excellent (> 1.5), Good (1.0-1.5), Fair (0.5-1.0), Poor (< 0.5)
• Value at Risk (VaR): 95% confidence level, 1-day and 1-month horizons
• Beta Coefficient: Defensive (< 0.8), Market (0.8-1.2), Aggressive (> 1.2)

Probability-Based Risk Assessment

Our risk assessment model provides probability estimates for various market scenarios:

• Market Correction Probability: 15-20% chance of 10%+ market decline within 6 months
• Individual Stock Volatility: 25% chance of 20%+ price movement within 30 days
• Prediction Accuracy by Market Condition: Bull markets (82%), Bear markets (68%), Sideways markets (75%)
• Loss Probability by Risk Level: Level 1-2 (1-3%), Level 3-4 (5-12%), Level 5-6 (15-30%), Level 7 (> 40%)
• Recovery Time: Average recovery from 10% loss is 3-6 months in normal market conditions

User Responsibility

By using our services, you acknowledge that:

• You understand the risks associated with investing
• You are responsible for your own investment decisions
• You will not rely solely on our predictions for investment choices
• You will conduct your own due diligence before investing
• You understand that even high-probability predictions can fail
• You accept the possibility of significant losses despite our risk assessments

Contact Information

For questions about this disclaimer or our services, please contact:
CHEEK DEREK KRISTOPHER LLC
4724 N 78th Dr, Phoenix, AZ 85033
President: Derek Kristopher Cheek
Company ID: 23669602
EIN: 99-2559374
CRD Number: 6694
SEC Number: 8-17983

Last updated: January 2024