January Stock Market Bounce Leads To Dangerous “Risk Off” Sales Pitch To Investors

As the stock market stabilizes from the devastating fourth quarter of 2018, investors must be wary of brokers pitching “risk off” trades. First, let’s define “risk-on risk-off.” It refers to changes in investment activity in response to global economic patterns, according to Investopedia. During periods when risk is perceived to be low, investors tend to engage in higher-risk investments, when risk is perceived to be high, investors have the tendency to gravitate toward lower-risk investments. The spike in junk bond sales so far this year shows that brokers are willing to load up their clients with riskier products, meaning that brokers and their Wall Street bosses believe that the risk the market saw at the end of 2018 when the S&P 500 stock index fell almost 14% is largely off. This thinking is clearly dangerous for Mom and Pop investors. The Wall Street Journal last weekend reported as much. “Junk-rated bonds and loans are flying off…

Read more detail on Recent Banking and Finance Law posts –

This entry was posted in Banking and Finance law and tagged , , , , , , , , , , . Bookmark the permalink.

Leave a Reply