We have had several clients ask for scenarios that pertain to the upcoming US presidential elections. Clearly there is a lot of uncertainty around an election that is more divisive than any in memory. While direct comparisons to other events in US history are hard
If there is one theme that underpins our writing on risk, it is that stress testing and scenario analysis are far superior to value at risk (VaR) measures. It is clear that VaR is not made for the market moves that we have been experiencing.
Stress testing is front page news. The Fed stress tests banks, large institutions stress test their portfolios and now financial advisors are using stress testing for their clients. But like most diagnostic tools, proper stress testing has a complex mathematical background. We make it simple
Portfolio Stress Testing is a useful method for determining how a portfolio will fare during periods of financial crises. The financial crises scenarios are modeled and may include historical events (e.g. 2008-like scenario) and events that we have not observed yet.
As you may know, the Federal Reserve recently released their stress scenarios: Base, Severe and Adverse. While the Fed may not explicitly regulate you, the role this organization plays in the financial markets cannot be underestimated. The specifics of their analysis are useful as the
What does Riskalyze Risk Number really measure? Disclosure of calculation and methodology essential for meaningful discussion. Riskalyze has responded to our criticism of the math behind their interest rate stress test. Unfortunately, the response does not address a single point of substance and seems rather personal. Our
This blog entry is published in the Financial Advisor Magazine Expert Views Risk management is all about finding the suitable risk/return profile. Suitable, that is, to the holder of the portfolio. When your client has a suitable portfolio, he or she will not sell when the
Know your funds. Detailed comparison of risk profiles of Vanguard Wellseley (VWINX), Vanguard Wellington (VWELX) and Thornburg Investment Income Builder (TIBIX) funds. Which one is more sensitive to inflation or a financial crisis? What about Fed Tapers QE scenario? The funds are put through series