Continued:
To grade our risks we have to fully understand the risks we are rating and deciding to absorb. We learn about our risk with three main analysis types.
Fundamental
technical
statistical
fundamental is investment grade risk and drives overall longterm views.. but how do you grade fundamental risk?
fisher effect
perceptive judgement
production power
fisher effect is the linear effect on price due to the interest rate parity as shown by capital appreciation. The grading is rated by understanding that people will power a source that pays for the investment at the expense of the other. This is true among all markets like equities like dividend payout ratio. You are absorbing investment risk to receive payment on amount of risk of operation you absorb. The better the payment for risk taken vrs. risk of holding something that rewards for much lower risk will show that in times of absorbing taking higher risk positions are taken over lower risk.
for example subprime crisis as risk taking lowered people transfered risk of holding positions for something with less carrying risk.. this is why riskfree investments rose and payouts decreased. And as accumulation of risk by the masses happen changes in perceptive judgement takes place.
Perceptive judgement changes when consumers of risk regrade their risk to determine whether they are still willing to accept the risk or not. In times of excessive risk taking is occuring consumers of risk should be wary and look to void risk. and as excessive risk liquidation occurs consumers of risk look for opportunities to absorb risk.
This why the market shows signs of the changing of perception of risk taking. excessive riskless positions->risk taking->excessive risk taking-> risk liquidation.
Production power grades the risk for it ability to produce results during risk taking times. The risk that has the most power and efficiency is going to receive a better grading and understanding of a better investment and ability of return per accrued risk.
To grade our risks we have to fully understand the risks we are rating and deciding to absorb. We learn about our risk with three main analysis types.
Fundamental
technical
statistical
fundamental is investment grade risk and drives overall longterm views.. but how do you grade fundamental risk?
fisher effect
perceptive judgement
production power
fisher effect is the linear effect on price due to the interest rate parity as shown by capital appreciation. The grading is rated by understanding that people will power a source that pays for the investment at the expense of the other. This is true among all markets like equities like dividend payout ratio. You are absorbing investment risk to receive payment on amount of risk of operation you absorb. The better the payment for risk taken vrs. risk of holding something that rewards for much lower risk will show that in times of absorbing taking higher risk positions are taken over lower risk.
for example subprime crisis as risk taking lowered people transfered risk of holding positions for something with less carrying risk.. this is why riskfree investments rose and payouts decreased. And as accumulation of risk by the masses happen changes in perceptive judgement takes place.
Perceptive judgement changes when consumers of risk regrade their risk to determine whether they are still willing to accept the risk or not. In times of excessive risk taking is occuring consumers of risk should be wary and look to void risk. and as excessive risk liquidation occurs consumers of risk look for opportunities to absorb risk.
This why the market shows signs of the changing of perception of risk taking. excessive riskless positions->risk taking->excessive risk taking-> risk liquidation.
Production power grades the risk for it ability to produce results during risk taking times. The risk that has the most power and efficiency is going to receive a better grading and understanding of a better investment and ability of return per accrued risk.