This means investors who want higher returns must consider taking on greater risk — by increasing leverage or
moving into riskier asset classes.
«In a strong market, people tend to take more risks and
move into some riskier assets.»
Correlation relates to the fact that a low volatility environment encourages investors to
move into riskier assets to get decent returns on their investments.
Non-asset holders were punished — their bank deposits now generate little or no income, and they were forced to
move into riskier assets, such as stocks, bonds, real estate, or «anything that offers some yield and is not bolted down to the floor» (please see my answer to What kind of market distortions does the Fed loaning out money at 0 % cause?).
Sure, retirees could
move into riskier assets like Junk Bonds or high - yielding REITS.
Correlation relates to the fact that a low volatility environment encourages investors to
move into riskier assets to get decent returns on their investments.
Not exact matches
Older investors may want to
move that money
into assets that are even less
risky, like cash or annuities.
But make no mistake — by
moving more of us out of super-safe cash and gilts and
into riskier assets like peer - to - peer savings, corporate and retail bonds and equities, the stakes are being raised for everyone.
At this point you could decide to protect your winnings and
move into less
risky assets, knowing your retirement is secure (unless you marry a Kardashian).
Specifically, you simply
move along the efficient frontier and
into other
risky assets with lower risk and more diversification, e.g. bonds.
To keep performance high, credit - focused managers are
moving back
into some of the
risky assets that got tarnished during the financial crisis like collateralized loan obligations, or CLOs, securities cobbled together from pools of corporate loans.
With all of the uncertainty in the stock market lately due to high levels of volatility in both February and August, people are going risk - off (meaning they are shedding
risky assets in exchange for more conservative plays) and many people are
moving into gold as a safe haven.
Do you believe that people like these firefighters from Florida, who are near retirement and have secure pensions with guaranteed monthly payments, should
move their money
into riskier assets with no guarantees just before they retire?
Stocks were hot and recent bond gains evaporated as investors
moved back
into risky assets.
It is also important to slowly
move your portfolio
into less
risky assets as you grow older to protect the growth of the portfolio from potential short - term market declines.
However, low interest rates have forced fund managers to
move more
assets into equities and other
riskier investments.