Are Investors Taking Too Much Risk?

HenryTo

Please participate in our new poll: Given the historically low junk bond and emerging market yield spreads, are investors taking too much risk today?

Please vote as well as share your thoughts! Please note that readers who are not registered posters will need to register before voting!

jmf · Newbie Joined: 24 Mar 2005 Posts: 1

We will only know this in hindsight! Most Bears have believed too much risk has been in the market for quite a while.... but the market keeps marching up that wall of worry!

Jim

HenryTo · Posted: Thu Mar 24, 2005 1:13 pm Post subject: hello

Jim,

Nice to see you here, and welcome to our forum.

Finally, a dissenting vote! Very Happy

In a way, I agree with you (and my latest commentary kind of covers that) since I don't believe this cyclical bull market is over yet. Bulls markets die in exhaustion, and you can't have exhaustion unless everyone and their pets are "in" the market, so to speak - similar to 1987 or early 2000.

However, from an emerging market and high yield debt standpoint, I think investors are definitely taking too much risk. Note that high inflows to international stocks (per AMG) over the last 12 months - highest since over a decade ago. Credit spreads are at or near all-time lows as well! There may still be a wall of worry in the equity markets but I sure don't see it in the international or junk bond markets. Confused

I am looking for a further 10% decline in the DJIA in the next six to nine months (there, I said it! Shocked

) - and even though I don't think the cyclical bull market is over yet, the market can definitely go down significantly even as it "climbs a worry of worry."

Dubious · Senior Poster Joined: 26 Mar 2005 Posts: 142

JMF that is with the fed rate at "emergency rates". That feeding tube is about ready to get yanked out the mouth of the Jubba the Hut consumers real quick. IMHO.

Fed rates are at emergency rates and the economy is in the crapper.

But we will see how it plays out....like most of us do not know all ready.

Dubious

efficiency · Posted: Mon Jul 11, 2005 10:32 am Post subject:

The VIX has reflected this for more than two years and a host of companies, different then 2000, have gone parabolic. Examples would be POT and HOV.

PonderThis · Newbie Joined: 16 May 2006 Posts: 11 Location: Bay Area

It's blatantly obvious that loose worldwide monetary policy has led to popular ignorance of systemic risk. Simply put, either fiat currency goes poof or the economy goes splat. We are set up for a severe adjustment at some point in the relatively near future. There has been too much built upon questionable premises and that means it is unsustainable. Even if the development is smart, the foundation is weak. Blame Keynesianism and monetarism.
_________________
My goal is independence. Sharing independent knowledge with others only helps.

Kemp Moyer
www.ponderthis.net

Lubov · Newbie Joined: 17 Jul 2006 Posts: 5 Location: Minsk

Yes, I agree that investors are taking too much risks, but the profits are too high, too. So this risk may be compensated by the profits... Wink

The game is worth the candle... Cool

The Chartist · Veteran Poster Joined: 29 Jan 2007 Posts: 168

Yes, stock investors take too much risk without even knowing it.

www.chart-dow-stocks.com
www.stock-market-resistance.com
www.stock-market-support.com