Article
A Perspective on Risk
Leo Melamed, John W. Labuszewski and Sandra Ro
The Journal of Investing Summer 2013, 22 (2) 79-94; DOI: https://doi.org/10.3905/joi.2013.22.2.079
Leo Melamed
is Chairman Emeritus of CME Group in Chicago, IL.
John W. Labuszewski
is a managing director in Financial Research and Product Development, CME Group in Chicago, IL.
Sandra Ro
is an executive director in FX Research and Product Development, CME Group in London, UK.
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A Perspective on Risk
Leo Melamed, John W. Labuszewski, Sandra Ro
The Journal of Investing May 2013, 22 (2) 79-94; DOI: 10.3905/joi.2013.22.2.079
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- Abstract
- FINANCIAL CRISES OFTEN OCCUR WHEN MARKETS “CORRECT” FROM EXTREME PRICE LEVELS (I.E., WHEN SO-CALLED “BUBBLES” BURST AND POSITIONS ARE LIQUIDATED IN HASTE)
- EQUITY MARKETS ARE, GENERALLY SPEAKING, THE MOST LIQUID OF GLOBAL MARKETS. THUS, THEY TEND TO BE THE MOST SENSITIVE AND RELIABLE “RISK BAROMETERS” AVAILABLE
- ALL ASSET CLASSES BECOME HIGHLY CORRELATED DURING PERIODS OF ECONOMIC STRESS
- BE ALERT FOR THE PROVERBIAL “BLACK SWAN,” I.E., TAKE NOTHING FOR GRANTED. LONG-ESTABLISHED TRENDS OR PRICING RELATIONSHIPS DO NOT PERSIST AD INFINITUM. WHEN THEY BREAK DOWN OR REVERSE, RISK MAY BECOME VERY APPARENT
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