Questions tagged [risk-management]

Risk management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions.

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2answers
96 views

How can I determine how much improvement (dollar value wise) I can put on an urban lot?

So, I'm in the position of considering where (within a given city/real-estate-market) I and my family want to build our next house (which will also be our first experience as homeowners -- we've lived ...
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0answers
117 views

Are there any studies on the success of day traders? [closed]

If you know about any published research paper on trade accuracy or from broker perspective that what percentage of clients are profitable in day trading.
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1answer
69 views

Investing recurring aggregated short-term funds

I have half a dozen "buckets" of short-term cash sitting in money markets; e.g., vacation fund, unforeseeable house repairs, a post-COVID wedding reception, etc. Looked at individually, none ...
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1answer
156 views

A trading program that modifies its own risk management?

The idea is that the machine would learn what level to put stops at, and where to put take profits. For example, the machine gets input about security ABC and learns the best place to put a stop. It ...
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1answer
67 views

Is flipping a coin with good risk management profitable? [closed]

I researched many trading strategies online, and in books, and most of the strategies said that a good risk management system was possibly more important than the strategy itself. I heard phrases like ...
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1answer
204 views

How to manage the money I got from “lump-sum housing lease”?

In South Korea, there is a concept called "jeon-se", which can be roughly translated into "lump-sum housing lease" or "long-term rental deposit". It goes like this: An ...
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3answers
234 views

Should I invest 50% of my savings (20K) into a family business?

Somebody in my family is proposing an investment opportunity. The deal is as follows. You put 20K and he is going to use it to sow rice, the return depends on the price per kg of rice but he tells me ...
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1answer
70 views

Self-funded & fully-funded health insurance plans for small businesses

Imagine that a hypothetical small business in the U.S., MoneySavers, is setting up a health insurance plan that it will offer to its employees. I'm looking for clarification on any misunderstanding ...
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10answers
12k views

If a broad long-term investment in the stock market is such a good deal, why don't banks do the “obvious” things?

There is a fundamental discrepancy or paradox that has been keeping myself, and many others, away from the stock market. Before I explain it, let me mention some selected popular questions on this ...
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1answer
53 views

Full investment in Forex with no leverage vs partial investment with high leverage

Assume two investors with $100,000 each, willing to invest them in Forex as scalp. Investor (a) Funds a brokerage account with the full $100,000 each trade is executed with the full $100,000. trades ...
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1answer
49 views

How does Sharpe Ratio work and what are the disadvantages of using it?

I am trying to understand Sharpe Ratio and I have tried to calculate it and compare it with Sharpe Ratio value from Yahoo Finance. I took daily closing prices for SPY from February 1st, 2018 till ...
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1answer
40 views

Life insurance and its risks on the insurer and the insured

Consider a life insurance contract designed for independent workers who have little salary and are afraid to lose their retirement opportunity: for example, they will always be obliged to work even ...
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1answer
57 views

Is it possible for a stock that is consecutively trading above $1 to get delisted?

Is it ever possible that a stock that is consecutively trading above $1 to get delisted? If so, how, and for what reasons? And if it happens, how often does it happen?
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5answers
4k views

Risks of using home equity for high risk market investing

I bought a home after the market crash in 2009 and I have quite a bit of equity in it now (100k). I still have 20 years until I retire and currently my main brokerage account is very high risk / high ...
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1answer
86 views

Is this Money Market Fund giving negative yield?

I had a question about interpreting money market fund metrics that was answered here, but which raised a new question. Schwab SWVXX is a money market fund which has a Gross Expense Ratio of 0.34% and ...
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2answers
182 views

Forward contract hedge and market-maker

Referring to McDonald's Derivatives Markets book, a market-maker or arbitrageur must be able to offset the risk of a forward contract. It is possible to do this by creating a synthetic forward ...
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2answers
246 views

What are the risks for a Canadian opening a Delaware corporation?

I am a Canadian, living in Canada, born in Canada to one Canadian and one Canadian/American parent, which makes me an American "Person". This means I am responsible for filing and paying ...
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1answer
85 views

Does a high beta indicate a higher risk of bankruptcy?

I recently asked Should retail investors learn and use the capital asset pricing model (CAPM)?, where a good answer mentioned that "beta" is a rough measure of risk, measured based on the ...
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1answer
90 views

Can a risky asset have negative beta coefficient?

I have a question from my tutorial asking whether Can a risky asset have negative beta coefficient? I can only think of how this is possible only if risk-free rate is more than the expected returns, ...
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2answers
240 views

What is the most risk-free way to invest a lump sum of cash for 1-2 years? [duplicate]

I received a signing bonus with my most recent position for which, if I leave the company after one year I must return half, and can keep the entire amount if I stay two years. I am a very risk-averse ...
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1answer
706 views

Should retail investors learn and use the capital asset pricing model (CAPM)?

I heard that the capital asset pricing model (CAPM) is commonly studied by finance students, and can help in controlling risk in stock portfolios. The CAPM looks rather complex as it seems to require ...
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1answer
120 views

Is it better to invest FULL savings, in a home before marriage, or PARTIAL savings after marriage (50/50 contribution with spouse)?

My question is around the safety of my brother's investment (Washington State, USA) if shit hits the fan and his marriage falls apart. He is planning to buy a property now (huge investment) but our ...
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2answers
170 views

How would the discovery of El Dorado impact the price of gold? [closed]

I have gold in my long-term investment portfolio and I am worried about sudden over-supplies of gold. If a City of Gold (e.g. El Dorado) or the Nazi gold train is discovered in the future, how can I ...
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4answers
336 views

Is it reasonable to split my money across two banks for security?

I am working to build an emergency fund, so I have money available in case I need it. I have read advice about keeping money split across multiple banks, for security. The idea is: if one of my banks ...
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1answer
134 views

Is there a currency risk in UCITS ETFs?

I'm interested in buying ETFs that track the US market, but because of the latest EU MiFID regulations, I'm only allowed to purchase investment products that come accompanied by some "KID", a Key ...
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1answer
485 views

Minimize risk of losing a lot of value for your savings during the corona crisis

Which investment possibilities are there for minimizing the risk that your cash savings (for simplicity let's say 100,000$) will severely lose value during the corona crisis? The focus is on avoiding ...
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4answers
78 views

Pensions and personal circumstances, assessment and alternatives

Pensions are very popular financial products, and are quite strongly encouraged, both through favourable tax laws and employers contributions. In all cases I am aware of, neither the contributions ...
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1answer
98 views

What happened to LTCM (Long-Term Capital Management)?

I recently learned about the LTCM fiasco and I find it ludicrous. From Wikipedia: Initially successful with annualized return of over 21% (after fees) in its first year, 43% in the second year and ...
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10answers
17k views

How can I protect my 401(k) when the stock market is performing badly?

I just opened my 401(k) at the beginning of 2017. In 2017 it did great because of the bull market, but since 2018 I've lost about $1,000. All of my contributions this year have been a complete waste. ...
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0answers
47 views

Are uninsured financial institutions riskier places to keep my wealth, now that cryptocurrencies make embezzlement easier?

Suppose that one or more high-level officers at a stock brokerage, or other retail financial institution, decide to embezzle most of the assets held there. The embezzlers liquidate the assets into ...
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4answers
205 views

Is it true that you can't take money out of the market using only risk management?

Is it really true what a lot of traders say: that in order for you to make money in the stock market it suffices to use risk management? For the following reasons, I think it is not true: Suppose ...
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1answer
133 views

Stock market fluctuations and when to sell out [duplicate]

I recently bought a medical marijuana stock at its lowest point. It is estimated that it will reach a high price by 2023. How can I know for sure when to sell out?
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1answer
180 views

Outsourcing rental risk: selling right to rent house?

I am wondering whether there is a way to get rid of the risk associated with renting a property one owns by selling the right to rent that property for a certain period? I am especially interested in ...
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3answers
2k views

Forex vs day trading for beginner investor

In essence, for a person that has not had any real experience with either (except for playing around in simulators like investopedia): which one would an individual have the most potential to ...
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0answers
57 views

Options trade - statistically expected return calculation?

I also asked this question here, for it to get more visibility. I am calculating expected return for composite option strategies based on event probabilities provided by the broker. For example, ...
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3answers
534 views

Should we consider real estate investment low, middle or high risk?

Should private investors investing in a specific (that is, not through some fund) real estate treat it as low, middle or high risk? Issues I consider: It's true that things move slowly in real ...
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3answers
347 views

Best way to cash-out for passive income

First, my investing knowledge is very limited (still new to this, still learning). Second, my question is somewhat unfocused, sorry about that but I hope that there is a somewhat concrete answer, ...
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1answer
128 views

U.S. 10 year treasury bonds behavior during crisis

It's often advised to buy and keep government bond to protect ourselves against the next upcoming crisis. (For example, in a defensive stock portfolio you can have 50% of stock and maybe 30% of ...
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2answers
176 views

Risk management strategies for ETF portfolio

I have an ETF portfolio (MSCI World, Euro Stoxx 600) and I'm following a "buy and hold" strategy. But I would also like to learn more about risk management strategies. More precisely, I'd like to ...
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1answer
623 views

What kinds of ETFs weathered well the 2008-2009 financial crisis?

I started to do research on which ETFs kept or increased their value over a recession in 2008-2009. I saw a lot of articles which says "invest in X, because X is always in demand (even in crisis)." X ...
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2answers
882 views

Should I have more than one brokerage account?

I have my brokerage business with one particular well-known US brokerage house. I find being able to access my retirement accounts and personal investment accounts through the one interface useful. ...
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6answers
425 views

Rational risk-assessment decision framework: Should I buy health insurance?

Update: I've posted a sub-question on the math stack exchange to help answer part of this primary question. Sub-question: Toy problem: How much should I rationally be willing to pay for this ...
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1answer
135 views

Is the issuer of an ETF a risk to consider?

When it comes the price of an ETF, I understand that it reflects the value of the underlying assets. What happens where a company that issues ETF comes into play on the decision of people whether to ...
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1answer
102 views

How often do regular businesses hedge their economic risks?

It's claimed that derivative instruments were made to allow real businesses to hedge their risks (unpredictable increase of supplies price, decrease price of the product in the future and so on, ...
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1answer
60 views

What are the ways to price a holding company?

I would like to know how people value holding companies. I guess the most famous one is Berkshire ($BRK.A - $BRK.B). And others exist. These holdings usually have a lot of exposure to realestate, PE ...
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4answers
932 views

Worried about wife's spending habits with impending lump sum

My wife of 18 years has a problem with money. She has stolen from banks using my identity, falsified documents to get cars, and has been to prison over it. I pay for everything and give her ...
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2answers
1k views

Break Even On Options Contracts

Given a calendar options contract (sold 1 month out, bought 2 months out same strike price) and someone says to look to adjust/close out the position at the break even points. Do they mean break even ...
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1answer
187 views

How can I defend my wealth from targeted attacks?

The more money I save the more paranoid I become about it. I have two concerns: Someone I argued with years ago sues me to squeeze out some money from me. The government itself wants to take my ...
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1answer
109 views

Setting and measuring risk profile target for retirement account

I understand that as you age you want to slowly lower the risk profile of your retirement account, but how should I determine how much risk I should take on currently and how do I measure how much ...
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1answer
666 views

How can I combine winrate, (risk/reward), and expectancy into a single formula?

winrate = wins / (wins + losses) I fiddled around with it and found that: requiredWinrate = risk / (reward + risk) Expectancy formula expectancy = (winProbability x averageWin) - (lossProbability ...