Questions tagged [risk]
Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). The notion implies that a choice having an influence on the outcome sometimes exists (or existed). Potential losses themselves may also be called "risks". Any human endeavor carries some risk, but some are much more risky than others.
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How to balance the risk of owning one real estate?
I am about 45 years old and recently began to receive a US government pension, which I do not require for current expenses. The monthly payment is about a quarter of my living expenses, but due to my ...
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Are there speculative ETFs analogous to investment funds?
Are there ETFs that bundle up highly speculative investments with high risk/reward profiles?
For instance, they might currently include Zambian, Nigerian, Brazilian and Venezuelan bonds; ...
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Why is there less buzz around IEP (Carl Icahn) than BRK.B (Warren Buffett)?
IEP is 95% owned by Carl Icahn. It most certainly passes the Skin in the Game principle Nassim Taleb likes to talk about.
I happen to own a couple of shares in it because of the man's incredible ...
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Why are tech stocks risky investments?
I've seen this mentioned so much in writings about intelligent investing, but I don't understand why.
Are Amazon and Netflix tech stocks?
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Why cannot LLCs be used to negate increased risks when doing leveraged investments?
Let's say that I am confident that some investment will grow by 15% per year, and that I have 10K to invest, and I'd like to use leverage to invest 100K.
What stops me from creating an LLC with 10K ...
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How to determine the right level of disability insurance based on a person's lifestyle
I'm trying to determine what level of disability insurance is right for me.
A thought crossed my mind: certain people experience less risk of disability. A person who works from home is at less risk ...
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What would happen to stocks during war [closed]
Let's assume if U.S went to WW3 in far or near future. If it is the case what would happen to the stocks and companies?
Will the stock fall enough to the point stock would just disappear? what about ...
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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 ...
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How to mitigate 401k risk with bonds?
I’ve read that for 401k’s, you want to reduce risk as you get older and the primary means to do that is to move money out of stocks and into bonds.
Assuming that principle is generally valid, then ...
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Should I spread my 401k investments across more than one broker?
After many years contribution, my previous employment's 401K account has more than 500K now. I don't like its plans which have less returns comparing with plans from other broker companies.
I am ...
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Benefits of investing at different stages of the supply chain
Say that I believe that the market for electric cars will explode in coming years. What are the benefits/detriments of the following investments at various levels of the supply chain?
Raw materials, ...
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Why does risk level matter?
In a perfect market, the extra losses of a high risk portfolio should exactly match the difference in returns between that and a low risk portfolio. In other words, a sufficiently diversified ...
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Ordering forms / areas of investment by risk
I have studied investing for a short while and would like to test my knowledge by asking a question about this ordering from lowest risk to highest risk of investment opportunities:
Government backed ...
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Are mutual funds composed of bonds really as low-risk as the bonds themselves?
I live in the US. I often see advice that a retirement savings account should include a combination of stock mutual funds and bond mutual funds, with the relative weights depending on the years to ...
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Risk free rate formula breakdown
In risk free rate formula below why is 1 added on numerator and denominator and the value is substracted by 1
Rf = (1+nominal risk free rate)/(1+inflation) -1
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Funds managed by companies that go bankrupt? [duplicate]
With all the talk of Wells Fargo looking pretty shaky, what's the deal with people that have investments through them? It's their fund, but it's not really in them? What happens to holders of ...
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Losing Money with Norbert's Gambit
In attempt to avoid the usual 1.5-2% exchange fees levied by brokers, I perform Norbert's gambit: I purchase DLR.TO in CAD (Canadian dollars) from TSX, journal it over to DLR.U.TO, and then sell the ...
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Is an Income Mutual Fund a good alternative to a savings account?
From what I've seen Income Mutual Funds, particularly an Index Income Fund, are relatively safe with a return greater than any 'guaranteed' return investment option. Obviously the actual return is ...
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What is the risk-neutral probability?
I discovered how to price European options and stumbled over a term and an equation I didn't understood :
If we assume that investors are indifferent to risk and that expected returns on all assets ...
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Diversify across multiple brokers?
Right now my brokerage account has a non-trivial fraction of my total assets. It's all in a single account with Interactive Brokers.
I know in theory customer funds and assets are ring-fenced, but ...
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Should I be worried that I won't be given a receipt if I pay with cash?
I'm getting an aftermarket accessory installed on my car by an individual. The person has actually been recommended to me by a big dealership in my area and this person seems to be pretty reputable ...
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How often do typical investors really lose money?
I know this is a bit too trivial for most of you, but please bear with me as I am a novice at this.
My question is: How often does an investor lose money?
What I know is: investors lose money by ...
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When buying a call option, is the financial stability of the option writer relevant?
A call option allows a person to buy a stock at some future date for a specified price. By implication, if it is "in the money" you'll be able to buy the stock at a potentially deep discount.
So it ...
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Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building?
The numbers in this question are for a developing country, so rates may seem high, but I tried to make them look reasonably related to each other to illustrate this question. The question also assumes ...
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What makes one smart and/or successful in investing? [closed]
Pretty broad question, but I hear these things thrown around a lot and was wondering if such a canonical or straightforward definition exists.
To make this simple:
What makes an investor "smart" as ...
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High-risk investing is better for the young? Why?
I have heard statements such as the question's time.
Basically, it's a financial motto: "If you're young, take on more risk."
I don't really understand it. I figured risk-tasking is a personal/...
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Why is "1" subtracted in the formula for nominal risk-free rate?
Nominal risk-free rate = (1 + risk-free rate) x (1 + rate of inflation) - 1
Why is one being subtracted at the end?
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As a 22-year-old, how risky should I be with my 401(k) investments?
As a 22 year old guy, how should I plan my financial life regarding my 401(k) investments? How much risk should I be taking?
Also, is it a good idea to invest in a dynamic portfolio with smart beta ...
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Building a diversified portfolio at market high
I am a Canadian, setting up an ETF-based RRSP in Questrade. Right now I have 70% of my portfolio in Canadian bonds, the other 30% of my portfolio is in cash, in USD. I am modelling my portfolio after ...
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How to find out who manages funds?
So I am interested in a fund. I want to know if I can trust the people running it. I don't know however, how to find out who they are. I have thee name of the company offering the firm but no ...
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Does dollar cost averaging apply when moving investments between fund families?
We'll likely be moving ~$100,000 (two Roth IRAs, about 80k/20k split) from a mix of Nationwide funds to a combination of Vanguard whole-market stock and bond index funds (details below). All else ...
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How to evaluate ETF correlations regarding risk? [closed]
I have picked three ETFs, collected 5 year historical data and calculated the correlation of daily end prices. I calculated the following correlations:
A B C
A 1
B 0.77 1
C 0.49 0.72 ...
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Risk to Reward Ratio Calculation
I'm learning how to do a Risk/Reward ratio and want to make sure I am calculating this correctly.
Let's start with a .92 per share of 500 shares purchase = $460.
I expect the stock to increase by ....
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Thinking about opening a Stocks & Shares ISA- is it best to invest a lump sum, or make smaller regular payments?
I have some cash on which I am not currently earning any interest, and with savings rates as low as they currently are, I am thinking about investing in the stock market to try and make the most of ...
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How can risk-reward relationship exist, since the losses due to the risk should offset the reward?
While this should be very basic, the risk-reward concept does not make sense in my mind.
I don't understand why the premium offered to offset the risk of an investment is not decreased, on average, ...
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Using Marine Traffic (AIS) to make stock picks?
I don't know anything about Gnuais, but satellite and terrestrial ship tracking?
It's all over the place.
https://www.ihs.com/products/ais-live-ship-tracker.html
(just one example; there are many ...
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Should I invest everything in emerging markets ETF when I'm young?
Lifecycle investing is growing in popularity in the industry, where people in their 20s and 30s are invested into high risk portfolios (equities) and people approaching retirement are transitioned ...
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Are Exchange-Traded Funds (ETFs) less safe than regular mutual funds?
I have read this question on the differences between both vehicles, but one the points was, perhaps, a bit under-emphasized: the relative risk.
I understand there are technical differences between ...
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What does a well diversified self-managed investment portfolio look like?
A lot of online blogs and investing material suggest that investing in a single index is not diversified enough to avoid some types of market risk.
So the question then is, what does a well ...
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Is the risk premium with insurance higher or lower than investments?
Insurance of any kind is always going to have a lower expected value than self-insuring. If there's a 10% chance of a loss of ₹100 occurring, insurance companies will charge more than ₹10, to cover ...
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Must a company have a specific number of employees to do an IPO?
I'm interested in a job offering from a company that is going for an IPO (Initial Public Offering) in the next 6 months. It is rumored that once the IPO is done they will lay off a lot of employees ...
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Finding Uncorrelated Assets
I own a particular security. How can I find another security, which has uncorrelated or negatively correlated (anti correlated) returns with the one I already own? I would like both securities to ...
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Are savings accounts just as safe as government bonds in terms of counterparty risk?
It seems that holding plain cash (say after selling stocks and waiting for other opportunities to come up) in a brokerage or bank account is a bad idea (due to counterparty risk) (Clenow, 2015).
...
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Conservative ways to save for retirement?
I was just wondering if there were any conservative ways to save for retirement. I am currently 24 years old and I started my first salaried job out of college a month ago. I am extremely conservative ...
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I provided personal information to a scam survey. What's my risk? [duplicate]
I filled out this survey to win a something. Then realized it was a scam. Felt really dumb. Anyhow, I gave my email, name, phone number and address. What can the do with the information I gave them?
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Which risk did I take winning this much?
This morning I made a large percentage profit on a position that the Japanese Yen was going to be strong. It seems that the estimate was correct, but I made much more money than expected. I more than ...
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Is there a name for high risk / high returns debt funds in India?
I'm looking for debt funds in India that aim to give you high returns, at the cost of high risk. Is there a name for such a category of funds?
I found one example of such a fund, Franklin India ...
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Is there any guarantee that index ETF will follow reference index?
As I understand:
index ETF attempts to track value of some specific index. It may be done by either really buying index (physical ETF) or by creating some arcane financial instrument that is supposed ...
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Risks of using a "free" (non-fee-only) financial planner for investing a substantial sum?
I have a substantial (at least to me) amount of money from the sale of a second home. The money is momentarily in a savings account at a big branch bank in the US. The amount is such that I have ...
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Can putting someone else as an authorized user on my credit cards hurt my credit score?
First of all, the other person would not get the physical cards (I would get the second card with their name, but destroy them upon receipt), so the balances should be safe.
However, I'm unsure if ...
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