BFFAF - Defining Risk: Tips To Weather And Profit From The Coming Storm

• Academic research suggests that risk equals volatility. However, as long as investors are not in the position of forced sellers, a strong stomach is enough to weather the storm.
• Even better, retail investors - who do not have to comply with regulatory requirements - can actually benefit in situations where institutional investors are forced to sell.
• The only real form of risk is that of a company defaulting on its debt, which in most cases results in a loss of principal for equity investors.
• The article provides simple tips for determining the financial strength of one's investments and separating the wheat from the chaff when it comes to potential purchases during a recession.
• In addition to well-known indicators of market stress such as the VIX, other lesser-known but equally effective indicators such as short-term high-yield bond ETFs and credit default swaps are discussed.

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