Analysis Topic: Companies Analysis

The analysis published under this topic are as follows.

Saturday, February 24, 2018

Reintroducing The Concept Of Stock Market Investing Risk / Companies / Risk Analysis

By: WMA

It has been a while. Aside from a bit of turbulence at the end of 2015 and the beginning of 2016, those investors turning a blind eye to financial market risk enjoyed a winning strategy since 2011. Equity market volatility had been particularly subdued from the U.S. election in November 2016 until this month. We knew that this extreme complacency had to end…it just lasted longer than any rational analyst could have predicted.

It almost seems perverse to write a Commentary on the importance of managing risk in this great economic expansion with strong company profits – aided by the Republican tax cuts. Investors who just buy companies whose share prices are setting all-time record highs pass as financial geniuses. However the earnings outlook, in our opinion, has gotten a bit too rosy. Wall Street optimism has markets priced for perfection, and with many market-leading stocks trading at levels inconsistent with past earnings cycles. And more experienced investors should know that bull markets do not die on pessimism. Our challenge is to convince our readers and investors that investing in a portfolio of blue-chip stocks today is not a sufficient risk management strategy.