Part two is that you drive down interest rates so you make safe assets less attractive so
you buy risky assets, OK.
Knowing what we know now, wouldn't we all love to have a second chance to
buy risky assets at 2008 valuations?
Given term premium suppression (via QE) reduced volatility and induced investors to
buy risky assets to boost returns, a sustained rise in long - term interest rates would give investors more options to achieve yield targets, thus making risk assets appear less attractive and ultimately erode demands for yield and tighten financial conditions.
If you think stocks will outperform,
buy riskier assets.
This very low market volatility can lead investors to take on more risk, and in a period of still relatively low interest rates, to «reach for yield» — that is,
buy riskier assets than one would otherwise, in order to achieve a desired profit or savings goal.
You end up taking more risk by
buying riskier assets which pushes up its price causing you to feel wealthier.
It did not take too long before they were
buying riskier assets and constantly diluting shareholders by doing seemingly constant secondary's.
Not exact matches
It could mean going into a Canadian equity growth mandate,
buying emerging markets, or playing with even
riskier assets.
But taking out debt to
buy an
asset as volatile as Bitcoin — as some investors seem to be doing with their credit cards — is
risky on a personal finance level.
When
risky assets get very correlated with each other, and the only alternative game to play is
buying high quality bonds, it is an unstable situation that portends lower
risky asset prices.
In financial theory,
riskier investments are expected to be more profitable because investments normally offer a reward in exchange of risk absorption — if they offered no reward, investors would
buy the less -
risky assets instead.
Most of the time, they say to make it so as soon as they see you have a system using more than a few
asset classes, the returns are good compared to the markets, there's a healthy amount of bonds, you're recommending small amounts of
risky asset classes, you're not trading stocks / ETFs, not trying to predict the future, and you're using mutual funds in a mostly «
buy and hold» fashion.
The banks and SIVs that
bought up «super-senior AAA» tranches of CDOs were looking for safe
assets, not
risky assets.
But you don't
buy bonds for total returns; you
buy them for income, and diversification; they tend to do well when
risky assets break down.
Although the price has held up and I could have been receiving the 6 - 7 % yield for the last 2 years, it was a much
riskier asset than when I
bought it (some shares were
bought with a 25 % + / - yield) and no margin of safety.
More literate households hold
riskier positions when expected returns are higher, they more actively rebalance their portfolios and do so in a way that holds their risk exposure relatively constant over time, and they are more likely to
buy assets that provide higher returns than the
assets that they sell.
As an alternative to help the hoousing supply problem without the unintended consequences of govt meddling, moral hazard, taking on more
risky assets, and trying to convince people to
buy for the wrong reasons, like 4.5 % rates.
This should encourage us not only to
buy houses, but also equities and other
risky long - term financial
assets.
This investment
asset class is often considered less
risky than
buying stocks which isn't always true since some fixed income investments are very
risky.
ETFs are just groups of stocks, commodities, or bonds, and they're less
risky than
buying individual
assets because the group works to balance itself out; if one stock tanks, it's offset by other
assets in the ETF.
Once the Portfolio was stable I would take the free CF to either
buy more properties or invest in paper
assets that are
riskier such as distressed debt or become a hard money lender.