Loading ...With all the recent events in the Middle East, a lot of investors have been spooked. The results in the stock market have been quite significant. The Wilshire 5000 Index, which is a pretty comprehensive measure of the total stock market, is down around 3% over the last two trading days. We haven’t seen a drop like that in many months. It seems pretty obvious that investors are finding the market a bit too risky right now, with the turmoil in the Middle East a potential threat to create skyrocketing oil and gas prices, which would put a damper on the consumer’s ability to spend money and support the economy. But are people really turning their back on risky investments right now?
The old saying, “No risk, no reward” holds very true in general. Riskier investments tend to pay off more in the long run. In good times, investors are more likely to put their money in riskier investments, thus the general appetite for risk is higher. Of course, the opposite is true in tough times like the ones we are in right now. Fortunately, there are a few ways of measuring investors’ appetite for risk. continue reading…
