The hottest Market risk Substack posts right now

JP Morgan reported a 29% decline in profits for the quarter.
CEO Jamie Dimon highlighted economic uncertainties due to government spending and global events.
Higher interest rates have made big banks like JP Morgan more profitable.

Index funds can make the stock market riskier by increasing how closely stocks move together. When more money goes into these funds, stocks often react in similar ways.
The ownership of stocks by index trackers affects their risk. More index fund ownership leads to higher stock price drops during market downturns, meaning more losses for those stocks.
As index funds grow, the overall market's volatility also increases, making big market drops worse than they used to be. The concern is that everyone could suffer larger losses during a major market downturn.

Nouriel Roubini warns that bonds, once seen as a safe investment, are now risky due to rising interest rates. Many investors didn't realize their bond values were dropping.
For people nearing retirement, Roubini suggests moving investments to safer options like short-term treasuries, inflation-indexed bonds, and gold. These could help protect against inflation and rising rates.
He believes that current bond losses could lead to a serious economic downturn. This creates a tough situation for central banks trying to control inflation.

Regulations can increase costs for businesses, affecting their profits. When companies have to spend more on compliance, their margins become thinner.
Different industries face different levels of risk from regulations. For example, manufacturing has higher costs due to regulation compared to services.
Investors should pay attention to companies with high regulatory risks since they can see bigger changes in their stock values. More regulation often means higher investment returns for those companies.

Governments can default on their debt, even in developed markets like the US. People used to think that US Treasury bonds were completely safe, but that belief has changed over time.
The risk of government default is not a black-and-white situation; it can vary. There is an ongoing perception in the market that there's some default risk associated with US government bonds now.
If default risk rises, it affects the overall market. Investors might demand higher returns for risky investments, making stocks and corporate bonds less attractive and potentially lowering their values.

Get a weekly roundup of the best Substack posts, by hacker news affinity:

Investors used to trust banks because they thought regulations kept them in check. Now, that trust is gone, and we can’t just assume all banks will act responsibly anymore.
The way banks determine dividends and capital requirements has changed. We should look at expected growth and regulatory needs instead of just past dividends to judge their value.
Banks need to be more open about their finances and risks. This means clearer details in their financial statements so investors can make better-informed decisions.

Risk-taking in investments can lead to big swings in performance. Sometimes the worst funds can become the best and vice versa, depending on market conditions.
It's not surprising when funds that performed poorly one year suddenly perform well the next. This happens because their strategies are closely tied to market risks.
The key to evaluating a fund isn't just short-term performance, but its ability to make money over the long run without being overly risky.

Betas are measures of relative risk, showing how exposed a stock is to market changes. A stock with a beta of 1.2 is more sensitive to market risks than an average stock.
Betas can't explain overall market changes because they average out to one. If one stock's beta rises, others will fall, so they don’t explain all market movements.
Betas also don’t capture risks unique to specific firms, like legal issues for tobacco companies or approval processes for biotech firms.