Category: Risk Analysis
The analysis published under this category are as follows.
Thursday, January 24, 2008
Investors Lose Relying On Worthless Rating Agencies - Moody's, Fitch and Standard & Poor's / Stock-Markets / Risk Analysis
By: Adrian_Ash
"The one sure way to prolong a depression is to resist it..." – Walter Lippmann, Sept. 1931
ISN'T MODERN LIFE MARVELLOUS? All risk has vanished, not least for high-risk behavior.
Hence Scott Anthony Gomez Jr., now suing the sheriff of Pueblo County in Colorado . Gomez was able to break out of his jail cell, push up a ceiling tile, and crawl to freedom through the ventilation shafts before slipping and falling 85 feet off the roof of his prison.
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Saturday, December 08, 2007
Black Swans and Endogenous Uncertainty of the Financial Markets / Stock-Markets / Risk Analysis
By: John_Mauldin
In this issue:
- Ubiquity, Complexity Theory and Sandpiles
- Fingers of Instability
- A Stable Disequilibrium
- General Equilibrium with Endogenous Uncertainty
- Identity Theft and New York
How does the risk of default in California or Thailand get spread throughout the world, causing problem in money market funds in Europe and Florida? Yes, we can trace the linkages now, but was it possible to predict the crisis beforehand? And can we use what we learn to predict and hopefully hedge ourselves from the next crisis? Why do these things seem to be happening with more frequency? This week we are going to look at some economic theories which will give us some insight into the above questions. As it turns out, the more that individuals hedge their risk in economic markets - the larger the network - the more the entire system is put at risk. There is a lot of ground to cover, so we will jump right in.
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Tuesday, October 16, 2007
Financial Crisis and Why Risk Valuation Tools in Practical Portfolio Selection are Meaningless / InvestorEducation / Risk Analysis
By: John_Mauldin
This week in Outside the Box, good friend and London business partner Niels C. Jensen further expands upon the fat tail dilemma I recently discussed in my "Black Swan" e-letter and why many of the risk metrics we use while in theory are useful, in application are woefully misleading. Niels does an excellent job of making the topic understandable and enjoyable to read. Read full article... Read full article...
Thursday, September 27, 2007
The Concept of Risk has Been Forgotten - Buffett's Dictum & Your Margin of Safety / Interest-Rates / Risk Analysis
By: Adrian_Ash
"...Risk has been abolished – a concept even the TV news anchors can grasp..."
"IF YOU UNDERSTOOD a business perfectly and the future of the business, you would need very little in the way of a margin of safety," said Warren Buffett at Berkshire Hathaway's annual meeting in 1997.
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Saturday, September 01, 2007
Seelking Apha in Financial Market Investments / Stock-Markets / Risk Analysis
By: John_Mauldin
In this issue:Past is Not Prologue, and Hope Is Not a Strategy
Eliminating Negative Alpha
Our Biggest Bet is Equities - Does Cap Weighting Weigh Us Down??
Practicing What We Preach
Update - Fundamental Index™ Today
New Orleans, London and South Africa
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Tuesday, August 07, 2007
Stock Market Troubles - Three Ways to Protect Yourself / Stock-Markets / Risk Analysis
By: Money_and_Markets
Tony Sagami writes: Although they posted a heck of a rally yesterday, U.S. stocks have had a couple of rough weeks. The S&P 500 lost 7.7% of its value from its peak in the middle of July through last Friday. That was its steepest three-week slide since 2003.
Friday was an especially ominous day because the S&P 500 fell below its 200-day moving average. Many market watchers consider that a key technical level. Picture Wile E. Coyote running on thin air and you'll get an idea of just what this break signifies!
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Friday, July 27, 2007
Back to Banking Basics - Risk Rating Agencies Assigning AAA to Risky Debt / Interest-Rates / Risk Analysis
By: Adrian_Ash
REMEMBER WHEN banks lent money using the cash deposited with them?
That's how most people still imagine banking works, even today. The banks hope to profit simply by charging more on their loans than they pay out to cash depositors. The art (or science) comes in choosing only the most credit-worthy borrowers, or adjusting the interest rate charged to higher risk debtors accordingly.
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Tuesday, July 10, 2007
Portfolio Insurance - The Same Old Short Comings / Portfolio / Risk Analysis
By: Michael_J_Panzner
On the face of it, it seemed like a great idea: an insurance policy for investment portfolios. No wonder it was popular with the Wall Street crowd. Unfortunately, it was not until the strategy was put to the test in the fall of 1987 that its many shortcomings came to light. By then, of course, it was too late.
“Portfolio insurance” was first developed more than two decades ago in an attempt to limit the damage caused by significant share-price declines. Previously, fund managers found it hard to adjust quickly to sudden market turbulence, mainly because of practical issues associated with rebalancing large portfolios at a time when technological solutions were limited and communications networks sluggish.
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Monday, June 25, 2007
The Relative Performance Derby And Other Evils Of Modern Investment / InvestorEducation / Risk Analysis
By: John_Mauldin
This week in Outside the Box we take a gander at the always-insightful research of good friend James Montier, who poignantly addresses the pertinent topic of portfolio diversification and the pitfalls that ensue on account of benchmarking, wherein investors obsess over relative performance and their respective tracking error. James asks the question, why does the average US mutual fund hold 160 stocks, when diversification could be achieved with around 30-40 stocks. The answer in word, benchmarking.Read full article... Read full article...
Friday, June 22, 2007
Bear Stearns and MBS Hedge Funds: What are the Real Risks Today? / Stock-Markets / Risk Analysis
By: Paul_Tustain
"...What people don't fully appreciate is the extent to which our financial system has geared up over the last twenty years to finance the worldwide residential housing boom..."
MOST SIGNIFICANT MARKET EVENTS cause an immediate and substantial price reaction, which makes it hard to profit from them. But sometimes there's a sort of slumber, when the market gazes sleepily about itself not quite sure what to do.
We may be experiencing one of them now.
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