The hottest Risk Assessment Substack posts right now

And their main takeaways
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Top Finance Topics

Look at the Big Picture

Are You Okay? • 0 implied HN points • 24 May 21
🏥 Health & Wellness Risk Assessment
  1. The discussion covered reentry anxiety, redefining 'normal,' managing risk, media bias, and public health advice
  2. The importance of considering the well-being and normalcy of children during the pandemic
  3. Upcoming event with Monica Gandhi to discuss the harms of COVID-19 versus pandemic restrictions on kids

Assess Your Risk

Are You Okay? • 0 implied HN points • 22 Feb 21
🏥 Health & Wellness Risk Assessment
  1. Pandemic fatigue affects many people and can be overwhelming.
  2. Confusion caused by mixed messaging about what is safe post-vaccination adds to frustrations and anxieties.
  3. The importance of seeking real-time, fact-based scientific information and medical guidance in decision-making.

Assess your Risk

Are You Okay? • 0 implied HN points • 19 May 20
🏥 Health & Wellness Risk Assessment
  1. Assess both individual and societal risks when making decisions, particularly in a pandemic.
  2. Understand the facts about COVID-19 such as handwashing, social distancing, and mask-wearing to make informed decisions.
  3. Apply the facts to your situation, weigh the risks against benefits, mitigate risks, then decide what actions to take - whether it's about wearing masks outside, seeing family over holidays, or sending kids to summer camp.

Active Shooter: When you can’t run, can’t hide, and can’t fight

School Shooting Data Analysis and Reports • 0 implied HN points • 01 Nov 23
🌍 World Politics Risk Assessment
  1. Guidance during active shooter situations usually advises to run, hide, or fight, but sometimes all options are impossible.
  2. Certain locations like concert venues, nightclubs, movie theaters, churches, shopping malls, and office spaces may limit the ability to run, hide, or fight during an active shooter event.
  3. When traditional responses are not viable, rapid assessment, basic trauma first aid, and improvisation with available items can make a difference in saving lives during an active shooter attack.
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On apples

The Jolly Contrarian • 0 implied HN points • 20 Jan 23
💼 Business Risk Assessment
  1. Bad apples can be difficult to identify and may exploit vulnerabilities in complex systems
  2. The concept of good bad apples highlights the challenge of spotting certain types of bad apples
  3. Process-driven governance may hinder the ability to uncover concealed bad apples; alternative approaches could be more effective in surfacing risks

How A.I. Could Hurt Humanity Soon

The Digital Anthropologist • 0 implied HN points • 03 Apr 23
🕹 Technology Risk Assessment
  1. AI could potentially cause significant harm to humanity, driven by humans in unexpected ways.
  2. Current limitations include the need for significant processing power, data, and energy for AI to pose serious risks.
  3. The lack of guardrails in place for AI development raises concerns about ethics, governance, and the potential for malicious use by rogue actors.

Data Update 4 for 2021: The Hurdle Rate Question!

Musings on Markets • 0 implied HN points • 10 Feb 21
💰 Finance Risk Assessment
  1. A hurdle rate is the minimum return a business wants from an investment based on its risk. If it's set too high, the company might miss good opportunities.
  2. There are different ways to calculate a hurdle rate, like looking at the cost of raising funds or considering the risk of the specific project. Using the right method helps better match the risk and reward.
  3. Hurdle rates can change based on business type, geography, and currency. It's important to understand these factors to make smart investment decisions.

Data Update 2 for 2021: The Price of Risk!

Musings on Markets • 0 implied HN points • 20 Jan 21
💰 Finance Risk Assessment
  1. The price of risk is the extra return investors seek to earn when taking on risky investments. It’s shaped by how much people are willing to spend and their feelings about market conditions.
  2. Risk premiums can change based on investors' fears and greed. When fear is high, people usually want higher risk premiums, which can lower the prices of investments.
  3. There are different ways to evaluate market risk, like looking at bond yields or estimating earnings for stocks, and these methods help us understand if investments are overvalued or undervalued.

A Viral Market Update IX: A Do-it-Yourself S&P 500 Valuation

Musings on Markets • 0 implied HN points • 04 Jun 20
💰 Finance Risk Assessment
  1. Stock prices can rise even when the economy is doing badly. This happens because companies can still make money, which keeps investors interested.
  2. The market doesn’t always reflect the current situation. Sometimes, it takes time for stock prices to catch up with economic changes.
  3. Investors should have a clear story or a plan about why they think the market will go up or down. It’s important to avoid getting mad when the market doesn’t match their expectations.

A Viral Market Update VII: Mayhem with Multiples

Musings on Markets • 0 implied HN points • 24 Apr 20
💰 Finance Risk Assessment
  1. Market prices have been very volatile as the coronavirus crisis continues, but there's been some recovery in stock values recently. People are looking for signs of stability in their investments.
  2. The use of pricing multiples, like PE ratios, is becoming less reliable during this crisis. Investors need to be cautious and consider the uncertainties that come with these financial metrics.
  3. Different asset classes have performed differently, with healthcare stocks generally doing well while energy and financial sectors have struggled. Understanding these trends can help investors make better choices.

A Viral Market Meltdown VI: The Price of Risk

Musings on Markets • 0 implied HN points • 08 Apr 20
💰 Finance Risk Assessment
  1. The stock market has been very volatile recently, but there was a slight calm where prices only changed by small amounts, which felt stable compared to earlier weeks.
  2. Investors are worried about risks, which has made them demand higher returns on both stocks and bonds. This means that the price of risk is rising across the board.
  3. The pandemic is making it vital for companies to regularly update their estimates of risk and returns instead of relying on old data, as the market is shifting rapidly.

Data Update 7 for 2020: Debt Delusions and Reality

Musings on Markets • 0 implied HN points • 21 Mar 20
💰 Finance Risk Assessment
  1. Companies with high debt are more likely to fail during tough times. It's important for them to manage their debt levels carefully to survive crises.
  2. Borrowing can seem appealing due to tax benefits, but it carries risks. The real impact of debt on a company's success depends on its ability to generate stable income.
  3. When assessing a company's debt, looking at different calculations is key. Debt measures based on earnings can reveal whether a company can handle its debt payments, even if its overall debt ratio looks good.

A Viral Market Meltdown Part II: Clues in the Debris!

Musings on Markets • 0 implied HN points • 09 Mar 20
💰 Finance Risk Assessment
  1. The coronavirus has significantly impacted global markets, causing a loss of around $7.3 trillion globally in just three weeks. Investors are clearly reacting strongly to the uncertainty surrounding the virus.
  2. Different sectors are feeling the effects of the market downturn unevenly. Industries like energy and finance have suffered the most while health care and utilities have remained more stable.
  3. Market behaviors suggest a movement towards larger companies as safer investments, but some smaller stocks have seen slight gains. This goes against the usual trend of investors flocking to larger entities during crises.

A Viral Market Meltdown: Fear or Fundamentals?

Musings on Markets • 0 implied HN points • 26 Feb 20
💰 Finance Risk Assessment
  1. The recent market crisis is driven by fear stemming from the COVID-19 virus, which complicates predictions about economic impacts. Investors are feeling uncertain and need to approach their decisions with caution.
  2. Market drops can be alarming, but it's important to view them in the larger context of overall market performance. Regular investors might not see major changes in their portfolios over the long term despite recent losses.
  3. It's essential to rely on your own judgment when making investment decisions, especially during uncertain times. With ongoing developments regarding the virus, staying informed and adaptable is key.

Data Update 2 for 2020: Retrospective on a Disruptive Decade

Musings on Markets • 0 implied HN points • 27 Jan 20
💰 Finance Risk Assessment
  1. The past decade saw strong growth in stocks, with the S&P 500 nearly tripling in value and a notable rise in bond returns as well. It was a great time for investors, especially those who held onto their portfolios.
  2. Interest rates dropped significantly during this period, influenced by both global economic conditions and central bank actions. Many believe these low rates are here to stay as the economy's fundamentals support them.
  3. Tech companies, particularly the FAANG group, led the stock market's rise, drastically increasing their market capitalization. This shift shows how important tech has become compared to traditional industries like energy.

Data Update 1 for 2020: Setting the table

Musings on Markets • 0 implied HN points • 13 Jan 20
💰 Finance Risk Assessment
  1. Accessing raw data for companies is easy now, but choosing the right data sources and how to analyze it is important. It's like picking the best ingredients for a recipe.
  2. Using different types of data, like macro and micro data, helps provide a clearer picture of a company's financial health. Each type of data tells a part of the company's story.
  3. Data can be biased and misused, so it's important to look beyond just numbers. Making decisions based on data should include critical thinking and understanding the context.

US Equities: Resilient Force or Case Study in Denial?

Musings on Markets • 0 implied HN points • 01 Oct 19
💰 Finance Risk Assessment
  1. The stock market has been strong despite bad news, but investors feel unsure and divided about the future. It’s hard to know whether to be optimistic or pessimistic right now.
  2. Some people worry that stocks are overpriced compared to history, but it's important to consider if earnings have also increased. Prices can be high, but that doesn't necessarily mean they’re not justified.
  3. A few big companies have driven a lot of the stock gains, which can be concerning. However, this concentration isn't new, and it often reflects changes in the economy and how businesses operate.

Testing Times: Market Turmoil and Investment Serenity

Musings on Markets • 0 implied HN points • 10 Feb 18
💰 Finance Risk Assessment
  1. In a market crisis, it's easy to lose perspective and panic. It's important to step back, assess the damage, and remember your long-term gains.
  2. Market drops can happen for different reasons, including fear, fundamentals like rising interest rates, or a reassessment of risk. Understanding the cause can help guide your decisions.
  3. Having a solid investment philosophy is key. Stick to your beliefs about investing, especially during turbulent times, and make decisions that align with your core principles.

January 2018 Data Update 5: Country Risk Update

Musings on Markets • 0 implied HN points • 25 Jan 18
💰 Finance Risk Assessment
  1. Country risk affects a company's equity risk. It's important to look at where a company operates instead of just where it's based.
  2. Different countries have different levels of investment risk. Higher risks usually require higher returns to make them worthwhile.
  3. Companies' cost of capital should vary based on the geographic locations of their projects. So, a project in one country might have a different hurdle rate compared to another.

January 2017 Data Update 8: The Dark and Light Sides of Debt

Musings on Markets • 0 implied HN points • 01 Feb 17
💰 Finance Risk Assessment
  1. When companies decide how much debt to take on, it’s really important to think about both the good and the bad sides of debt. Debt can help a company save on taxes and keep managers in check, but it also increases the risk of financial problems.
  2. There are real benefits to using debt, like tax savings, but many people get distracted by myths about debt being better for returns. It's crucial to understand that higher debt can also raise costs, especially if companies run into trouble.
  3. Different industries handle debt in various ways. For example, companies in technology tend to use less debt, while capital-heavy industries, like trucking and telecom, often carry more. Understanding this can help investors see the bigger picture.

Myth 4.1: If you don't like betas (or modern portfolio theory),you cannot do a DCF!

Musings on Markets • 0 implied HN points • 04 Nov 16
💰 Finance Risk Assessment
  1. Discounted cash flow (DCF) analysis needs a discount rate, typically estimated using beta to assess risk, but not everyone agrees on using this method.
  2. Investors can use alternative risk measures if they don't like betas or modern portfolio theory, such as based on historical earnings or other company characteristics.
  3. It's important to recognize that while betas can help estimate costs of equity, there are other ways to evaluate risk that might better fit different viewpoints on investing.

The Brexit Effect: The Signals amidst the Noise

Musings on Markets • 0 implied HN points • 29 Jun 16
💰 Finance Risk Assessment
  1. Brexit caused big market reactions, with the British Pound losing value quickly against the US Dollar. This showed that currency fluctuations can signal larger economic issues.
  2. Experts were often wrong in their predictions about Brexit's consequences, leading many to distrust their advice. This highlights how people sometimes ignore experts in favor of their own beliefs.
  3. Stories matter more than numbers in shaping public opinion. The Leave campaign had a stronger narrative, which attracted more support compared to the Remain side's focus on statistics.

Valeant: Information Vacuums, Management Credibility and Investment Value

Musings on Markets • 0 implied HN points • 20 Apr 16
💰 Finance Risk Assessment
  1. Valeant experienced rapid growth by acquiring other companies and raising drug prices, which attracted many investors. However, this model was risky and heavily relied on debt.
  2. The company's troubles began when it faced scrutiny over its pricing strategies and financial practices, leading to a significant drop in stock value. Without financial transparency, investors became concerned about its future.
  3. Valeant's management credibility waned amid delays in financial reports and legal issues, making it clear that the previous business approach could not be sustained. Investors now have to tread carefully, as the company's future is uncertain.

January 2016 Data Update 8: Pricing, with an end of month update

Musings on Markets • 0 implied HN points • 01 Feb 16
💰 Finance Risk Assessment
  1. Global stock markets lost over $5 trillion in January 2016, mainly influenced by drops in China and falling oil prices. This marked an overall decline of about 8.42% in market value.
  2. The equity risk premium in the US was noted to be high during January, indicating increased market risk. This was driven by factors like high cash returns that exceeded earnings.
  3. Market impacts varied significantly by region and sector. China was hit hardest, while sectors like utilities and tobacco fared better compared to others like biotech and electronics.

January 2016 Data Update 1: The US Equity Markets

Musings on Markets • 0 implied HN points • 04 Jan 16
💰 Finance Risk Assessment
  1. In 2015, US equity markets showed resilience despite facing significant crises, with the S&P 500 ending almost unchanged, which is a positive outcome given the challenges.
  2. The equity risk premium (ERP) for stocks is currently at 6.12%, suggesting that investing in stocks might offer good returns compared to risk-free assets, but this is based on softer earnings than before.
  3. Caution is needed, as the current high ERP could drop if earnings fall or bond rates rise, so it's essential to keep an eye on these factors when investing.

Pricing Country Risk - Pictures of Global Risk - Part III

Musings on Markets • 0 implied HN points • 29 Jul 15
💰 Finance Risk Assessment
  1. Country risk should be considered in investment strategies. Riskier countries generally have lower price-to-earnings (PE) ratios compared to safer ones.
  2. Comparing different equity multiples can help find good investment opportunities. However, you must be careful as some outlier countries can skew the results.
  3. Using enterprise value multiples can be less affected by country risk, but may still not fully account for it. A good approach is to value and price companies together to make informed investment choices.

The Small Cap Premium: Where is the beef?

Musings on Markets • 0 implied HN points • 11 Apr 15
💰 Finance Risk Assessment
  1. The idea of a small cap premium suggests that smaller companies can earn higher returns than larger ones, but the evidence for this is getting weaker. Recent studies show that the historical data is mixed and may not support this premium anymore.
  2. Investors often assume that small companies are riskier and expect higher returns because of this. However, current market prices are not reflecting a higher expected return for small cap stocks compared to large ones.
  3. Many analysts keep using the small cap premium because it's a common practice, not necessarily because it’s the best approach. It's important to question its use and consider other ways to evaluate the risks related to smaller companies.

Discounted Cashflow Valuations (DCF): Academic Exercise, Sales Pitch or Investor Tool?

Musings on Markets • 0 implied HN points • 01 Feb 15
💰 Finance Risk Assessment
  1. Discounted cash flow (DCF) is a method to figure out what an asset is worth based on its expected future cash flows, adjusted for risk and time. It's more about the practice of valuation than complicated math.
  2. Many people find DCF intimidating because it's often overdone with unnecessary details or used as a sales tool. This can make it hard for others to trust or understand the process.
  3. Valuation is not perfect, and you'll probably make mistakes due to uncertainty. But that's okay; even experts struggle with predicting the future, and market values can change too.

Country Risk, Return and Pricing: The Global Landscape in January 2015

Musings on Markets • 0 implied HN points • 19 Jan 15
💰 Finance Risk Assessment
  1. In 2014, the US stock market did well but some emerging markets performed even better, suggesting potential opportunities elsewhere. It's important to think beyond just strong performers when investing, as the market can shift quickly.
  2. Country risk can be tricky to assess, and two common methods are looking at sovereign ratings and CDS spreads. These numbers help understand the risks investors face in different countries.
  3. Even risky markets can offer bargains if the prices are right. It's key for investors to consider both risk and potential return when evaluating global opportunities.

An ERP Retrospective: Looking back (2014) and Looking forward (2015)

Musings on Markets • 0 implied HN points • 03 Jan 15
💰 Finance Risk Assessment
  1. The equity risk premium (ERP) shows what investors expect to earn from stocks over risk-free investments like government bonds. It's a key measure of investor sentiment and market risk.
  2. In 2014, the ERP fluctuated around 5% but increased at the end of the year due to updated growth rates, indicating changes in how investors view risks for stocks.
  3. Looking ahead, there are three main risks for the markets: potential drops in earnings, changes in interest rates by the Federal Reserve, and global economic uncertainties that can impact stocks.

Bubble, Bubble, Toil and Trouble: The Costs and Benefits of Market Timing

Musings on Markets • 0 implied HN points • 16 Jun 14
💰 Finance Risk Assessment
  1. There are different types of people who warn about stock market bubbles, like Doomsday Bubblers and Rational Bubblers. Each type has its own view on whether we are in a bubble or not.
  2. A bubble can be defined as a situation where stock prices rise significantly without support from the actual company's earnings or fundamentals. It's important to notice the difference between a real bubble and just market fluctuations.
  3. Deciding whether to react to a potential bubble is tricky. You could either reduce your investment in stocks or try to profit from a correction, but both options have their own risks and costs.

A good year ends, but what's next for stocks?

Musings on Markets • 0 implied HN points • 02 Jan 14
💰 Finance Risk Assessment
  1. Many people are worried that stocks might be in a bubble, but opinions vary on this. It's possible to see things differently depending on which metrics you focus on.
  2. The cash flow and growth from companies will help determine stock values. If companies continue to grow and generate cash, stock prices may hold steady.
  3. Investors need to be cautious about risks like rising interest rates or economic downturns. These factors can significantly affect stock prices and the overall market.

Valuation of the week 1: A Tesla Test

Musings on Markets • 0 implied HN points • 05 Sep 13
💰 Finance Risk Assessment
  1. Tesla's current market value seems too high given its low revenue and operating loss. Many investors wonder if it can continue to grow without making profits soon.
  2. For Tesla to succeed, it needs to increase its revenues and eventually turn a profit. This requires a lot of investment in production and technology.
  3. The risks for Tesla are significant, especially due to market competition and its financial status as a young company. It might have a tough road ahead despite its high market price.

Market Multiples: Global Comparison and Analysis

Musings on Markets • 0 implied HN points • 30 Jul 13
💰 Finance Risk Assessment
  1. PE ratios help investors compare stock prices across countries, but many companies have negative earnings making PE less useful for them. It's important to consider the overall financial health of countries, not just their PE ratios.
  2. Price to book ratios can give a clearer picture of a company's value but should be used carefully. Countries with low price to book ratios might look cheap but could also have low returns, suggesting a deeper look is needed.
  3. Enterprise value to EBITDA multiples provide another way to assess company value, though they can sometimes show unexpected results. High returns on invested capital don't always align with high EV/EBITDA ratios, so understanding each country’s context is key.

Developed versus Emerging Markets: Convergence or Divergence?

Musings on Markets • 0 implied HN points • 29 Jul 13
💰 Finance Risk Assessment
  1. Stocks in riskier areas usually have lower prices. This shows that investors want higher returns for taking on more risk in emerging markets compared to developed markets.
  2. There has been a noticeable trend where the prices and valuations of companies in emerging markets are starting to converge with those in developed markets. This is mainly due to falling prices in developed markets rather than significant gains in emerging markets.
  3. Investors should adjust their expectations for returns in emerging markets. These markets are becoming less risky, but they are not positioned to give the high returns that used to be expected.

Rediscovering risk in emerging markets: A Country Risk Premium update

Musings on Markets • 0 implied HN points • 10 Jul 13
💰 Finance Risk Assessment
  1. Investors often forget about risks during good times but become overly worried during bad times, especially in emerging markets. Recently, many have realized that emerging markets have more risk than they thought.
  2. Sovereign ratings and default spreads are important for understanding country risks, but they are often slow to react to changes. This shows that emerging markets can be more vulnerable and that investors need to stay updated on these risks.
  3. The perception of risk is shifting back to where emerging markets are viewed as riskier compared to developed markets. This might mean investors should reconsider where to put their money, especially if they believe the adjustment in stock prices isn't enough to match the increased risks.

A Sweet Spot for US Equities: Opportunity and Dangers

Musings on Markets • 0 implied HN points • 28 Mar 13
💰 Finance Risk Assessment
  1. US stock markets are currently doing well, but investors should be cautious about potential downturns or corrections. It's important to stay informed and not just ride the wave of rising prices.
  2. Key factors determining stock prices are cash returned to investors, expected growth, risk-free rates, and risk premiums. Each of these plays a role in how we value and perceive stocks.
  3. Despite some risks, stock prices are elevated for good reasons: strong cash flows, decent growth prospects, and poor returns from alternative investments make staying in the market appealing.

Back to Apple: Thoughts on value, price and the confidence gap

Musings on Markets • 0 implied HN points • 07 Feb 13
💰 Finance Risk Assessment
  1. Valuation and pricing are different. Valuation looks at a company's future cash flows, while pricing is affected by market supply and demand.
  2. Investors need to assess their confidence in the estimated value gap. A big gap doesn't guarantee a profitable investment without confidence in how or when it might close.
  3. Catalysts can help close the price and value gap. These can be actions by the company, market changes, or influential investors stirring up attention.

Data Update 2013: The Dark Side of Numbers

Musings on Markets • 0 implied HN points • 13 Jan 13
💰 Finance Risk Assessment
  1. Some people use complex numbers to scare others into agreeing with them. You can fight this by sticking to common sense and focusing on the main idea.
  2. Data can be twisted to support a certain viewpoint by only showing what fits. Always check for the full picture before believing claims.
  3. Many analysts hide behind data instead of making tough decisions. It's better to personalize and adapt data to your own understanding rather than rely on generic numbers.