1 Apr 2024

Feel Like Taking Risk? So Does Everyone Else

Last week, I showed four charts that all said the same thing: US stocks are a little expensive when compared to fundamentals (click here to read the article). You could fairly accuse me of saying the same thing this week, but this time, I’m using the bond market. The chart below shows the spread (or difference) between high-yield bonds. High-yield bonds, also known as junk bonds, are issued by companies… Read More

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21 Mar 2022

Visualizing Market Losses Today

I’ve been accused of repeating myself, and, in truth, it’s a fair accusation. Today I want to show a chart that I’ve shown before. Instead of showing the total growth of the stock market over time, where the good drowns out the bad, I want to highlight the bad. I don’t want to scare anyone; I actually think it’s reassuring. The measure I’m showing is called a drawdown, which shows… Read More

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25 Oct 2021

I Finally Bought Bitcoin

Several years ago, I went to the movies and noticed a machine selling Bitcoin in the lobby. I’d read about Bitcoin and thought about buying one just to keep an eye on it. Then, I thought that $3,500 was an expensive night at the movies and just enjoyed the show. A year later, I went back, and the price had risen to $16,500 per coin, and I realized that night… Read More

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18 Mar 2019

Risk & Volatility

Using the words ‘risk’ and ‘volatility’ interchangeably is one of the bad habits of many financial professionals, myself included.  When pressed, we know better, but we make this mistake all of the time nonetheless. Merriam-Webster has four definitions of risk as a noun, two of which are applicable here: ‘the possibility of loss or injury,’ and ‘the chance that an investment (such as a stock or commodity) will lose value.’ Volatility, according to Merriam-Webster,… Read More

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21 Aug 2017

Is Volatility Too High? Goldilocks Says it’s Just Right

Well, I am fresh back from vacation in Northern Michigan.  I had the pleasure of driving over the Upper Peninsula twice during this trip to pick up one of my daughter’s from camp.  That’s three trips over the UP this summer, but, sadly, only one pasty. From my perch up north, the big story for me was seeing volatility spike up for the first time in what seems like forever…. Read More

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14 Aug 2017

Getting to Know Your Volatility

After a summer of historically low and realized volatility in the market, we finally saw a sharp spike in volatility as tensions rose between North Korea and the US last week. While the exact cause and timing behind the volatility could not have been predicted, we did know that the low levels of volatility would not continue forever. Whether or not volatility is back for a while, it is always… Read More

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21 Dec 2015

Analyzing Air Force Bombers

I read an interesting story recently about risk management in a book titled Red Blooded Risk by Aaron Brown. During World War II, the Air Force was trying to figure out the optimal amount of armor that should be added to it’s bombers.  Since every pound of armor means one few pound of bombs, it means that more bombing runs will be needed to deliver the same payload. The Air… Read More

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