Investment Market Risk Metrics June 2018

Published: Jun 05, 2018

The purpose of this analytic package is to form the beginning of a risk conversation with decision makers.  Our intention is to stimulate an ongoing dialogue about market risks.  Risks can often times become ordinary and thus invisible. Much like the window washer who works 30 stories above the street each day, we can become lulled into believing the existing state of affairs is not risky.  However, upon further analysis and study within an illuminating framework, we may arrive at a very different conclusion.

Our intention therefore is to provide a consistent framework to revisit market risks regularly.  In doing so, we intend to increase understanding of the risks we track, and open an intelligent conversation about risk management from a common set of principles. Furthermore, in tracking slow moving (but cumulative) measures of risk over time, we can better identify changes to the cumulative risk embedded in the markets.  Finally, this approach may lead us and our clients to develop risk-oriented responses to risk trends that become apparent. 

While we want to reiterate that this analytic package is not meant to be a guide to tactical asset allocation, we hope that you will find it useful as a way to gain perspective and frame the conversation.  If this tool helps to maintain focus on the overarching risks borne by the portfolio, risks that decision makers must continually assess and respond to, it will have achieved its goal.