Displaying items by tag: risk

Tuesday, 29 January 2019 08:28

The Stocks Most Threatened by Climate Change

(New York)

Climate change risk has slowly but surely crept into the consciousness of even the most mainstream investors. As its prominence has risen, so too has its ability to impact share prices. With that in mind, here are some of the individual shares most vulnerable to such risk. The names are not what you would expect. For instance, Norwegian Cruise Lines and Royal Caribbean Cruises, along with pharma companies Merck and Bristol-Myers-Squibb were identified as the most at risk. “There are many ways to measure how climate change affects your portfolio. One is to see how the physical facilities of the S&P 500’s constituent companies are affected by hurricanes, sea-level rise, and heat stress”, says Barron’s. One head of ESG commented on the list that “you’re exposed” no matter where a company has its headquarters”.


FINSUM: Norwegian is most exposed because it has so many facilities in Miami, where the risk of rising sea levels is very high. Sorting out these risks is a major challenge and it would behoove advisors to seek out the main data providers for such risk, like Four Twenty Seven.

Published in Eq: Total Market
Wednesday, 16 January 2019 11:07

The Best Funds for Risky Markets

(New York)

Markets are up since Christmas, but anybody who feels like they are on solid footing is probably a fool. So one of the big questions right now is how to play risky markets? Well, Barron’s has just published a piece outlining what they see as the best funds for such an environment. The picks are based on 15-year performance, including how funds performed during the Financial Crisis. Here are some to look at: AMG Yacktman, Parnassus Core Equity, Invesco Dividend Income, JP Morgan Small Cap Equity, and Neuberger Berman Genesis.


FINSUM: Not a bad idea to look at the funds that have been the best overall risk managers.

Published in Eq: Total Market
Wednesday, 12 December 2018 11:55

These Risks Could Bring Down the Market in 2019

(New York)

The market is in its toughest position in recent memory. Numerous headwinds, none of which are easy to resolve, are stacked against it. Wit that in mind, banks are starting to publish their doom and gloom outlooks for 2019. Nomura has identified a number of “grey swans” (not black) which could topple the market next year. Some of the most interesting risks they identified included a European debt crisis sparked by Italy, oil plunging to $20 per barrel, the end of populism, and an “inflation sonic boom”.


FINSUM: To be honest, we think these are all very unlikely. What is much more likely is a recession accompanied by a trade war.

Published in Eq: Total Market
Tuesday, 02 October 2018 09:50

The Stock Market’s Riskiest Sector

(New York)

The best US stock sector of 2018 is also now the market’s most risky. Consumer discretionary stocks have been on a run this year (as they often do when rates are rising), but that may be about to change. According to Morgan Stanley, consumer discretionary, which is composed of retail, apparel companies, and automakers, may be set for a big fall. “An early-cycle sector trading at peak valuations in a late-cycle environment”, is the way Morgan Stanley describes the sector. The average P/E ratio for consumer discretionary stocks is 35% above the S&P 500’s average.


FINSUM: Amazon is disproportionately responsible for the consumer discretionary’s gains this year, but the other stocks in the sector could be good shorting opportunities.

Published in Eq: Consumer
Wednesday, 22 August 2018 08:24

How to Manage Your Portfolio as Stocks Look Risky

(New York)

The markets look troubling right now. They are just about to cross to a new high at the same time as they have just breached the record for the longest ever bull market. P/e ratios are way above historical averages and stocks have risen 400%+ (including dividends) since their lows in 2009. At the same time, there are ample geopolitical headwinds, tightening rates, and trouble in tech. Is it time to take risk off the table? Maybe, but don’t act rashly. The key is to take small, gradual, and reversible steps. If you end up being right, you will have minimized your losses, but if you end up being wrong, you won’t kick yourself from missing gains.


FINSUM: Advisors say that these kinds of strategies are well-received by most investors, so simple risk mitigation efforts can go a long way to minimizing the psychological discomfort one feels at the potential peak of the market.

Published in Eq: Large Cap
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