This week I want to discuss risk and reward when thinking about investing.
A lot of the best money managers care just as much about risk as they do reward when making an investment decision.
Currently, we believe that a lot of individuals aren't focused on the risks that remain in the markets.
The stock market this week reached another new high in the face of a lot of short-term risks.
For example, trade tensions haven't really calmed down much.
There's definitely a decent amount of political and economic risk abroad and a lot of big money managers are starting to reassess risk.
For example, in the corporate loan market a lot of businesses have been able to borrow on the cheap at whatever terms they seemingly wanted for a while.
Now money managers have started to push back.
In fact, there hasn't been this much pushback in the loan market since 2015 when oil sold off quite sharply.
At Round, we remain defensive at the moment until we see some of these short-term risks calm before we re-enter the bull market.
Hope you have a great week ahead!
Disclosure: The stock market setting a new high was in reference to the S&P 500 during the week of 8/20/18 - 8/24/18. Corporate loan statistics reference Bloomberg article - Leveraged Loan Buyers Are Losing Patience With Riskier Deals.
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