Do Markets Overprice Disaster Risk?
Episode Description
In normal years, investing in equities can reap extremely healthy returns. But not all of that ROI is based on what you'd think. Some of it is rooted in the fear that everything could go terribly, unexpectedly wrong, Wharton's Jessica Wachter says. More: http://knlg.net/1C8ASrE 📂 Finance & Accounting 🏷️ Research
Brief Summary
The episode covers how economywide disasters affect stock prices and investor behavior, emphasizing risks and volatility in the market.
Key points
- Understanding Stock Market Volatility. Research links economic disasters to stock prices, explaining their volatility and high returns.
- The Risk of Stock Investments. Investors must recognize that stock returns are not guaranteed and can be volatile.
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Episode highlights
- Understanding Stock Market VolatilityResearch links economic disasters to stock prices, explaining their volatility and high returns.“This really could explain the magnitudes of stock market volatility that we see.”2:16Jun 29, 2015
- The Risk of Stock InvestmentsInvestors must recognize that stock returns are not guaranteed and can be volatile.“Stocks are an important part of the portfolio, but they might not come back up.”3:17Jun 29, 2015
