Tag Archive | "Risk"

Investing in China Can Involve Limited Risk


Several years ago, most people never would have admitted to not having a position of some sort in China. Chinese companies were all the rage at the time; their markets were exploding, growth was in the double-digit domain and even when people started getting a whiff of a recession domestically, China’s growth was still close to double-digits.

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Camping on the Risk Mountain


Sherpa Tenzing gives you a call and says “do you want to come mountain climbing with me?” What is your first thought apart from wondering how a guy like this got your number? I suspect it will not be the glorious views from the top of Everest but your mind will, by instinct, focus on the very sticky and bloody mess your body could turn into if you slip and fall but without a bungee rope.

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The Top 5 Risk Issues For Residential Or Multifamily Investment Purchases


The lure of returns and equity gains often blind investors to the risks they are taking. In fact, only rarely do we really focus on risks. And when we do attend to risk, we are prone to always do this while entertaining all the great and wonderful gains that are ahead. This article focuses on risk alone and suggests that in some cases and perhaps all cases we should focus on risk and risk alone to try to better grasp the vulnerabilities of our investment choices for residential or multifamily investment.

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Capital Growth – Is it a Risk Or an Opportunity?


I love investing… because from personal experience I can see it works. The source of our wealth is investing. Yes, the incomes we received from our jobs enabled us to invest, but we would not have become wealthy because of our jobs. Investing is a form of forced savings. As much as capital growth on an investment is very exciting, it also brings with it a level of risk.

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Lowering the Risk of Losing Your Money


If you are thinking about investing in a business or even spending money with a company that you have never heard of or one that has yet to establish a business reputation, it may be worth considering having a company credit check performed on them. A company credit check could help you decide if an investment is sound and help you establish the risk in investing.

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Assessing Hedge Fund Risk


Assessment of risk is one of the primary aspects of due diligence when evaluating a potential hedge fund. Because hedge funds are designed to obtain absolute growth despite market conditions, there are many areas where the short term volatility of a particular investment may cause some high-risk funds to lose value. Understanding these risks requires an objective means of measuring the volatility and how it relates to the investment strategies employed by the fund manager. Just as the management styles and portfolio holdings are different from fund to fund, so too may be the type of assessment used to evaluate risk.

Most diligent hedge fund managers use several different types of financial equations to evaluate volatility, and thus risk, in any given portfolio. In general, managers will use one or more of the following to assess risk: The Sharp Ratio, The Sortino Ratio, or The Sterling Ratio. These are not the only measures of volatility and risk, but they are some of the more common measures used. When evaluating a particular level of risk, it is important to choose the right type of evaluation in order to get numbers that are meaningful and directly related to the types of investments within the fund.

The Sharp Ratio measures risk-adjusted performance. In terms of risk, the standard deviation of portfolio returns is used as a measure. The return is then adjusted for a known risk-free asset, such as a Treasury bills or some other asset that has a guaranteed return.

The Sortino Ratio measures the amount of incremental return that can be obtained per level of risk. The Sortino ratio uses the downside deviation to measure volatility. In this method of measuring volatility, an acceptable rate of return must be assigned – typically this is set at 0% for hedge funds, but that is not always the case.

The Sterling Ratio divides the annualized return of the portfolio by the average yearly maximum drawdown, minus a certain percentage. Drawdown is a measure of loss over time. It starts with the beginning of the loss and continues until the stock or other asset begins to improve – this measure, taken over time, is the maximum drawdown. My analyzing this drop in prices, the hedge fund manager can assess the amount of negative volatility, and therefore, make an educated assessment of the risk.

It is important to remember that none of these ratios are absolutes. They are only estimates of potential investment viability, and as a result, are only as accurate as the estimations of the hedge fund managers themselves. Keeping track of volatility with regards to hedge funds is prudent on several fronts. Positive volatility can be used to make large gains in a relatively short amount of time. And by hedging against negative volatility, the successful hedge fund investor can curb losses that would result in poor returns for investors. You must have a manager you trust when it comes to evaluating the numbers presented – an over or underestimation could skew results to the point that they are meaningless with regards to volatility measure.

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Take on Greater Risk in a Smart Way to Boost Investment Income


When dealing with maturing term deposits in today’s low-rate environment, investors are left with a couple of options. In this brief article, we outline how taking on additional risk to boost investment income need to by synonymous with taking on unnecessary risks. View full post on Investing Articles from EzineArticles.com

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Reducing Risk With Dividend Funds


Regardless of your asset allocation model, you can reduce the risk in your portfolio by relying on dividend funds to make up your core portfolio. We discuss this in greater detail in this brief article. View full post on Investing Articles from EzineArticles.com

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The Secret to Making a Fortune in Investments – Huge Profits With No Risk


Do you want to know the secret to make a fortune in investments? The secret that offers you a huge profit with little or no risk? Sorry to disappoint you, but there is no such thing. However there is something else. View full post on Investing Articles from EzineArticles.com

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cXVpY2tpbnZlc3QubmV0L3dwL3dwLWNvbnRlbnQvd29vX3VwbG9hZHMvNC1xLmpwZyI7aTozO3M6NjE6Imh0dHA6Ly9xdWlja2ludmVzdC5uZXQvd3Avd3AtY29udGVudC93b29fdXBsb2Fkcy8zLXFpbG9nby5qcGciO308L2xpPjxsaT48c3Ryb25nPndvb192aWRlb19jYXRlZ29yeTwvc3Ryb25nPiAtIFNlbGVjdCBhIGNhdGVnb3J5OjwvbGk+PC91bD4=