Correction Continues - The Value Of Risk Management

(9min)

Summary

  • Individuals can increase and reduce exposure to risk during periods of higher volatility. This is because the most significant drawdowns tend to occur during periods of increased price volatility.
  • If the economy slips into a recession or some other event disrupts forward earnings expectations, there is undoubtedly a risk of a further increase.
  • The problem with being at zero exposure is the lost of appreciation in the markets before the correction is deemed technically over.

Financial Data - Stock Market, Prosperity, Bull Market - Green And Red Stock Charts, Graphs Going Up, Financial Gains

DKosig

Despite the recent rally, the correction continues. While wanting to “buy the dip” is tempting, there has been enough technical damage to warrant remaining cautious in the near term. As we have discussed, managing risk requires discipline and the emotional ability

This article was written by

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After having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; I have pretty much "been there and done that" at one point or another. I am currently a partner at RIA Advisors in Houston, Texas.

The majority of my time is spent analyzing, researching and writing commentary about investing, investor psychology and macro-views of the markets and the economy. My thoughts are not generally mainstream and are often contrarian in nature but I try an use a common sense approach, clear explanations and my “real world” experience in the process.

I am a managing partner of RIA Pro, a weekly subscriber based-newsletter that is distributed to individual and professional investors nationwide. The newsletter covers economic, political and market topics as they relate to your money and life.

I also write a daily blog which is read by thousands nationwide from individuals to professionals at www.realinvestmentadvice.com.

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